Demand for property in Portugal continues to be popular. But are the prices rising too high for many to see Portugal as feasible option to purchase property overseas?
A general overview
At the moment, inflation is being felt across the markets, and real estate is no exception.
As ever, buying a home in Portugal remains a popular option. According to Idealista, between April and June alone, 43,607 homes were sold in Portugal, 4.5% more than in the second quarter of 2021. But this fact is combined with another. Since the end of 2020, house prices have risen every quarter. Today, homes in Portugal cost (on average), 22% more than the second quarter of the pandemic and 29% more than before the pandemic.
Price changes are not the same across Portugal
According to National Institute of Statistics in Portugal, in the 2nd quarter of 2022, the median house price of dwellings sales in Portugal was 1 494 €/m2. This represents a year-on-year growth rate of +17.8% (+17.2% in the previous quarter). Moreover, there was an increase in median house prices compared to the same period in the previous year.
But this growth is not felt equally throughout the country.
The year-on-year rate increased in six regions. The two sub-regions with the highest median house prices are Algarve (2 258 €/m2) and Lisbon (2 076 €/m2).
Both sub-regions also had the highest values in both categories of the purchaser’s tax residence: national territory (respectively, 2 222 €/m2and 2 050 €/m2) and foreign (2 734 €/m2 and 3 782 €/m2).
However, seven out of the 24 municipalities saw a deceleration.
The golden visa scheme
Much of the noise in the Portugal property market has been generated by the golden visa scheme. Under the golden visa scheme, the Portuguese government set out qualifying investments for obtaining a five-year residence permit in Portugal. One of these qualifying investments is buying a property worth €500,000 or more. Doing so will enable you to obtain a five-year residence in Portugal. The resident permit gives you the right to live, work, and study in Portugal and allows free circulation in Europe’s Schengen Area.
Naturally, many foreigners, including post-Brexit Brits, have found a home in Portugal via the golden visa scheme.
But it appears this has created a concentrated interest in the Algarve and the capital, Lisbon. The Algarve is known for its luxury. It is home to famous golf courses, glitzy marinas, and Michelin starred restaurants. It is no wonder that the Algarve is seeing such growth.
In summary, the interest of foreign buyers is causing significant year-on-year growth in concentrated areas. In regions that are less popular with foreign buyers, the experience of the property market is a different story.
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