Portugal is one of the top destinations for overseas buyers, whether it’s people looking for retirement, or entrepreneurs and developers attracted by Lisbon’s recent tech boom. So, if you’re buying a home here in this sunny country, what should you know about the Portuguese property market?
1. Prices are rising, but are yet to reach 2007 levels
Portugal has been enjoying some of the strongest price growth in Europe, with a yearly growth of around 6% reported for 2018-2019. This only looks set to continue, with Moody’s predicting price growths of 7 to 8% – so now really is the time to buy.
Some developments, such as luxury resorts, are seeing even greater price growth: 18% in the last quarter.
According to data from Idealista, the top property hotspots are Lisbon, with an average price of €2,637/m2, the Algarve, with an average price of €2,072/m2, and the beautiful island of Madeira, with an average price of €1,493/m2.
2. Madeira offers the strongest growth potential among the islands
The islands are one of the few areas where prices are falling, with the Azores seeing a decrease of around 5.7% on average. Prices are also some of the lowest in Portugal, at around €849/m2.
That’s great news for those looking for an affordable home who aren’t necessarily looking for an investment. However, don’t write off the islands because of the overall average. Illha Santa Maria, one of the smaller islands, and São Jorge, in the centre of the Azores, have both registered growth of just over 9%.
Equally, away from the Azores, the perennial favourite of Madeira, popular with the British for over a century, is still enjoying reasonable price growth. Madeira is seeing a growth rate of just under 2%, and Porto Santo of almost 3%.
3. The ‘wealth tax’ has had little impact
In 2017, Portugal introduced a tax on the VTP, or land registry value, of properties over €600,000. However, it seems to have had little impact on the property market, as the transaction value of the property market has grown rapidly. In fact, in the second half of 2018, the sale price of luxury homes in the country increased by 18%. While this doesn’t mean that it was their eventual selling value, it does mean that there is a clear increasing demand causing sellers to be confident putting up their prices.
4. Head inland for more affordable property
If you’re looking in pricier areas like the ever-popular Algarve, head a bit inland and you’ll find properties much more affordable. The Alentejo, that beautiful, rural hinterland of the Algarve, is often overlooked by people researching the Portuguese property market, but you’ll find bargains (and a perhaps more ‘authentic Portugal’ of historic whitewashed villages). The average price is almost half that of the Algarve, at €1,026/m2.
If you’re looking for a renovation project, the number of historical villages – and a lower population as the young move to the cities – mean that there are lots of opportunities for you to find the right place.
5. Don’t miss the Silver Coast
Buyers are often drawn to the Algarve for seaside living – and the appeal is undeniable – but don’t also miss the Silver Coast. On this Atlantic-facing coast, you’ll find fantastic waves for surfing – and more affordable property, outside of spots like Cascais. In Leiria, for example, the average price is €965/m2, and, around Coimbra, €929/m2.