Portugal – a country of fine wine, welcoming locals, and a high quality of life that doesn’t compromise on its low cost of living – is now an established player in real estate circles. With pristine beaches hugging the coastline, top-quality international schools, and affordable healthcare, it is no wonder why more expats than ever before are moving to this gorgeous country.
Whether you are considering snapping up a luxurious villa to move to with your family, a holiday home to enjoy in the balmy summer months, or retiring in style to the Algarve region, Portugal has plenty to offer. Plus, for investors, you’ll find several opportunities to secure a strong return on your investment. However, the important question that you’ll want to ask yourself is: Is now a good time to buy?
In this article, we will answer that question by offering the latest insights into the Portuguese real estate market, as well as explore what makes investing and living in Portugal sought-after and, ultimately, whether now 2024 is a good year to begin your investment journey.
One of the Safest Countries in the World
Portugal is the seventh safest country in the world, according to the 2023 Global Peace Index, pinpointing Portugal as a highly desirable location to live in.
The country’s stable socio-economic and political system, low crime rates, progressive legislation, and friendly locals are each contributing factors to why expats choose to relocate, whether it’s more opportunities for their family, affordable healthcare provisions, or a relaxed work-life balance.
Buying property in Portugal is not just a financial investment, but an investment in securing a better quality of life. Investing in a stable country provides peace of mind, for example, in knowing that there are low levels of corruption.
The Portuguese Real Estate Market Shows Signs of Stabilization
Before buying a house, regardless of the country, you’ll want to understand the basics of the market. The Portuguese real estate market is thriving – and has been for the past few years.
However, there have been reports that the real estate market is showing hints of stabilization – or even deceleration – as demonstrated by data on real estate transactions in 2023 when compared with the number of transactions in 2022. In 2022, there were 134,000 real estate transactions in Portugal while, in 2023, this number fell to 126,000 sales (until the end of November 2023).
Though it’s too soon to determine if this trend will continue, the number of transactions provides a robust benchmark for gauging the property market’s performance. With this said, it’s important to acknowledge that this shift isn’t consistent nationwide, especially when considering distinctions among the high, mid, and lower tiers of the market.
If we look at the period before this, over the past years, property prices in Portugal have been increasing rapidly. Take Lisbon City, for example, which has registered a growth rate of 50 between 2017 and 2022. Porto, the second largest city in Portugal, experienced a growth rate of 84 percent over the same time period. Price increases in Portugal highlight the desirability of the market, demonstrating the potential for appreciating property values.
It’s also important to note that, in 2023, Lisbon and Cascais maintained their prices throughout the year in the higher tiers of the market, highlighting that luxury real estate continues to be highly sought after in these locations.
Smaller Cities Take the Spotlight
While Lisbon and Porto have been the primary drivers of growth in Portugal in recent years, the latest data from an exclusive report by Confidencial Imobiliário reveals a shift in the real estate landscape. Surprisingly, it is the smaller cities situated on the outskirts of Lisbon and Porto that have exhibited the most substantial growth in 2023.
For instance, Seixal and Almada, both located on the periphery of Lisbon with excellent connectivity to the capital, have witnessed growth rates of almost 20 percent in certain areas. If you are looking to snap up a property, these areas are likely to increase in value over time.
Secure Attractive Rental Yields
Depending on where you buy and the type of property you choose to invest in, you should be able to secure a nice return on your investment.
With a booming tourism industry and an ever-increasing number of digital nomads heading to Portugal –particularly Lisbon and Porto – there is potential for both short-term and long-term rentals. While short-term rentals can generate more capital, they often require more hands-on management due to high tenant turnover.
With more young professionals, digital nomads, and tech companies relocating to Portugal, an attractive proposition is to buy a property to rent it out long term. Cities such as Lisbon, Porto, and Braga have become particularly popular with tech and start–up companies, fueled in part by Web Summit relocating to Lisbon in 2016.
Average gross rental yields in Portugal generally stand at the 6 percent mark, although this is dependent on the location.
With demand outstripping supply in major cities, you should be able to secure a strong return on your investment for both short and long-term rentals, provided you buy in a suitable area.
To back this up, recently, data from Idealista, published in Portugal News, has shown that the profitability of buying a house and renting it out has increased. Towards the end of 2023, the yield was 7.3 percent, higher than the 6.3 percent recorded over the same time span in 2022.
So, is it worth buying property in Portugal in 2024?
If you are debating whether Portugal is right for you, a significant advantage of buying a Portuguese property is that there are no restrictions on foreign buyers, and buyers have many options to secure loans from Portuguese banks.
For luxury buyers, there is an incredible range of property types, from modern apartments and swish beach villas to vineyards and equestrian properties. You can even find castles and palaces in Portugal, if these are the property types you desire.
As we enter 2024, Portugal’s real estate market remains dynamic, and foreign investments continue to fuel the market. With appealing rental yields, both for short and long-term rentals, and the potential for appreciating property values, investing in Portuguese property can be a smart move.
This is backed up by the country’s inherent benefits – a relaxed pace of life, stunning landscapes, high English proficiency, excellent schooling and healthcare, topped off by its sublime climate.
Buying property in Portugal in 2024? It is definitely worth considering.
