As one of the country’s most popular coastal treasures, living in Algarve, Portugal, has attracted tourists, expats, and property investors alike with its luxurious and leisurely lifestyle and relatively affordable living costs.
The Algarve region is the perfect destination for extended holidays or relocation. Its diverse lifestyle offerings include world-class golf courses like Monte Rei, exceptional Portuguese dining options, and adrenaline-pumping outdoor activities on some of the best beaches in Portugal that have become popular with the large international community that now calls this region home.
In this article, we will give you an insider’s view of life in the Algarve and explore everything from the best areas to live in the Algarve region and discuss the intricacies of buying and renting property in the Algarve.
An Introduction to Living in the Algarve
The Algarve coast is nestled along the magnificent Atlantic Ocean and is favored by Portuguese citizens and expats alike. Retirees, families, and digital nomads from across the world choose to relocate to this region of mainland Portugal, known for having the best beaches, golf courses, and some of the best international schools in the country. With beautiful beaches, a rich history, and friendly Portuguese people, it’s not difficult to see why the region buzzes with visitors during tourist season and why countless expats have chosen to seek residence in this beautiful part of the country.
Keep in mind that in order to live in Algarve, Portugal, you will need to secure a residence permit through residency visa programs like the Portugal Golden Visa, Portugal D7 Visa, or the Portugal Digital Nomad Visa.
Climate
The Algarve, Portugal, has a sublime Mediterranean climate with warm summers and moderate winters. This incredible climate allows visitors and residents to relish time spent on picturesque beaches, world-class golf courses, or simply having dinner outdoors throughout the year. Although the Algarve’s weather is popular for having more than 300 days of sunshine, you should keep in mind that you will experience a few rainy and windy days when living in the Algarve in winter.
Popular attractions
The Algarve, Portugal, is renowned for its coastal charm bordered by the Atlantic Ocean. The Algarve region features natural attractions like the Benagil Caves in the small fishing village of Benagil and some of the best beaches in Europe, like the amazing beaches of Praia da Rocha in Portimão and the stunning shores of Praia da Falésia in the coastal city of Albufeira.
You will also discover a scenic natural park or two to explore in between discovering more about Portugal’s captivating cultural heritage at popular attractions such as the Roman Ruins of Milreu, the Museu de Portimão in Portimão, and the Old Town in the Algarve’s capital city of Faro, which features 18th-century Portuguese and Moorish architecture and sites.
Real estate in the Algarve region
The Algarve Coast boasts a diverse array of rental properties and even the opportunity to buy property at relatively affordable property prices, ranging from modern city apartments to charming beachfront villas and countryside townhouses. Whether you seek luxury or affordability, the options are abundant. Whether you are looking for a modern apartment in the city, cozy villas near the beach overlooking the sea, oror a quaint townhouse in the country, there are many options available for sale and rent that you can explore before settling on the perfect property.
Cost of living in the Algarve, Portugal
The cost of living in the Algarve is fairly affordable, with costs varying based on lifestyle. According to Numbeo, in 2024, the price per square meter to purchase an apartment in a city center is €3,100. Prepaid mobile tariffs, internet, and utility costs will vary depending on usage.
Basic utilities, including electricity, water, and refuse services, will cost €100 in an 85-square-meter apartment. A couple’s basic monthly income can be €800-€1,200. For a modest lifestyle, a budget of €1,250 is needed, while luxury living may require €1,800.
Best Places to Live in the Algarve
In this section, we will briefly explore a few of the finest Algarve areas to live in. These areas cater to diverse lifestyles, whether you are looking for a charming townhouse or a luxury beachside villa.
Faro
Faro, the Algarve region’s capital, attracts expats with its rich history and cultural allure. Faro offers diverse tourist attractions, like the stunning Ria Formosa Natural Park that stretches along the southeastern coast of the Algarve from Faro to Tavira, making it an enticing prospect for investors buying property seeking a blend of cultural richness and thriving demand.
Tavira
Nestled along Portugal’s Eastern Algarve coast, Tavira offers visitors and residents coastal calm and authentic Portuguese cultural richness. With stunning views of the Gilão River and some of the Algarve’s best beaches, Tavira is a charming city with a mix of history and modern amenities. Known for being a laid-back and quieter part of the Eastern Algarve, Tavira is perfect for those seeking a relaxed lifestyle and peace of mind.
Portimão
Portimão offers warm weather and affordable living, attracting both expats and digital nomads with its welcoming community, overall beauty, and historic charm. What sets the city apart is the perfect balance of modernity and authentic Portuguese culture, as well as stunning beaches like the amazing Praia da Rocha.
Albufeira
Albufeira, located on the coast in the southern Algarve, is a holiday hub offering sandy beaches, a vibrant nightlife, and iconic views of the striking limestone cliffs and captivating rock formations the region is known for.
Finding Property in the Algarve
The Algarve is known for having diverse accommodation options, whether you are interested in buying property or looking for a rental space. In the sections below, we will explore the property types available in the Algarve, discover more about the region’s real estate market, and discuss the different processes of renting and buying property.
Property types
Alongside the warm climate, pristine beaches, and laid-back lifestyle the Algarve offers, the stunning region in Southern Portugal also features a great selection of property types to rent or buy. Whether you are in search of a furnished two-bedroom apartment in the Faro town center or a luxury villa near one of the stunning beaches in the area, you are sure to find the right property at more affordable property prices when compared to more popular areas of Portugal and other European countries. Doing your research and working with a local rental company or real estate agent will help you find apartments, villas, or townhouses in the Algarve region that meet your requirements.
Real estate market trends
The Algarve real estate market has grown significantly over the past few years. More foreign property buyers are becoming interested in buying property in the Algarve to list as a rental property and earn rental income. In the third trimester of 2023, the Algarve areas of Faro and Portimão had an increase in rental yields for property investors. The rental yields increased by 4.8 percent and 5.4 percent, respectively.
Buying versus renting considerations
There are pros and cons to consider when it comes to the choice of buying or renting property in Algarve, Portugal. Renting will offer you more flexibility and the opportunity to explore the region until you find the perfect place to settle down. It is also the cheaper option if you do not have the capital to purchase property and can only afford the security deposit for an affordable apartment.
Buying property is a more extensive process but a well worthwhile investment considering growing rental yields and high quality of life in the region. However, besides the property price, there are additional property buying costs you will need to consider, such as certain legal fees, Notary fees and property taxes.
Requirements for buying and renting property in the Algarve
Whether you are entering into a rental contract or buying real estate in the Algarve, applying for a Portuguese NIF number is essential for the process. Foreign residents and investors must have a NIF number as it is the Portuguese tax number required for any transactions you complete in Portugal.
The Portuguese tax number (NIF) is required to open a bank account in Portugal which is a recommended step in the process. You can apply for the NIF number at your local tax office. Non-EU citizens will need a fiscal or representative to secure a NIF in Portugal
Having a Portuguese bank account will help you avoid transaction fees when making your purchase. There are a variety of Portuguese banks to consider, many of which offer mortgages for foreign buyers.
Documents required to buy property in the Algarve
To purchase property in the Algarve, you will need to prepare the following documents to conclude the sale and reach the final step of the process, which is signing the Escritura or Final Deed.
- Photo ID: A valid identification document that verifies your identity.
- Contrato Promessa de Compra e Venda (CPCV): The buying contract or property deed that outlines the terms and conditions and final price of the property purchase.
- Energy Certificate: This document provides information about the property’s energy efficiency and must be presented to you by the seller.
- Imposto de Selo: The stamp duty payment is a tax required by the Tax Authority for property transactions.
- Caderneta Predial: The land register document contains information about the property, including its location, boundaries, and registered owner.
Property Taxes in the Algarve
Below, we briefly explain the applicable Portuguese property taxes for property acquisition and ownership in Portugal.
Municipal Property Tax (IMI)
The IMI (Municipal Property Tax) is an annual tax whose amount is determined by the municipality where the property is located. The rates range from 0.3 to 0.8 percent based on the property type and location.
Property Purchase Tax (IMT)
Calculated based on the property’s value or declared amount in the deed, the IMT (Municipal Tax on Onerous Transmissions of Real Estate) is a property transfer tax that needs to be paid before the purchase is completed. The property transfer tax rate stands at 7 percent and the overall amount is based on property type, location, and purchase price.
Stamp Duty
The Stamp Duty (Imposto do Selo) is an additional transaction tax the Portuguese state charges for real estate transfers. It amounts to 0.8 percent of the deed’s total value and must be paid at the time of purchase.
AIMI (Wealth Tax)
The Portuguese Wealth Tax (AIMI) is a post-purchase tax that applies to property worth more than €600,000. There are three levels of taxation based on property value:
- 0.7 percent tax for properties valued between €600,000 and €1 million
- 1 percent tax for properties valued between €1 million and €2 million
- 1.5 percent tax applied to property worth more than €2 million
Capital Gains Tax
Capital gains refer to the profit from the property’s sale that may be subject to taxation. When you sell your Portuguese property, you must submit the property’s purchase details to the tax authorities for a capital gains assessment. You may be exempt from capital gains tax if you reinvest the total selling price in a new home.
Practical Information about Living in the Algarve, Portugal
In the next section, we will explore insights into life in the Algarve, Portugal, as we provide practical information if you decide to make a property in this coastal region your primary residence.
Accessibility and transportation
Direct flights to the Algarve region are available through Faro International Airport, which is just 4 km from Faro, the capital city of the Algarve. Like many major European cities, the Algarve features an efficient public transport network. The international Faro airport is located just four kilometers from the capital’s city center.
You can rely on public transportation like the train or inter-city bus to get you from A to B seamlessly. You will also be able to make use of Uber as well as a local taxi service, which will cost you about €3.25 per kilometer. As English is widely spoken, you will be able to communicate clearly with locals if you need directions. If you want to explore more freely and find more remote areas of the Algarve to enjoy, hiring a car is recommended.
Safety
Portugal is one of the safest European countries and ranked in the seventh position on the Global Peace Index in 2023. Compared to other European countries, Portugal has low crime rates.
Healthcare
The national healthcare system in Portugal is very good. The National Health Service or Serviço Nacional de Saúde (SNS) provides free healthcare to children under 18 and people over 65, in addition to providing healthcare at just a minimal cost to all other residents and citizens. Expats moving to Portugal generally opt for private health insurance due to it being a requirement for Portuguese visa applications. If you are moving to Portugal from the US, you will be happy to know that you can easily find an affordable private health insurance scheme in Portugal for healthcare. Having private health insurance also comes with the benefit of quicker access to specialized assistance.
Education
Expats relocating to the Algarve region with their children will be happy to know that this coastal region offers an excellent selection of international schools, much like the Portuguese cities of Lisbon and Porto. You will find a variety of top education facilities in the neighborhoods of Lagos, Lagoa, Loulé, and Albufeira, offering American, British, and French curricula. According to Numbeo, the average annual fee for one child attending an international primary school is €6,000 in 2024.
Closing Thoughts on Living in the Algarve, Portugal
The Algarve is a coveted destination for locals and expats alike, boasting some of the best beaches, golf courses, and international school in Portugal. The region’s allure is palatable, with expats from the world over being tempted by its sublime climate, relaxed pace of life, and gorgeous beaches. If coastal bliss is what you are after, then the Algarve holds all the cards.
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Frequently Asked Questions About Living in Algarve, Portugal
Is the Algarve a good place to live?
If you are interested in living an authentic Portuguese experience, the Algarve region on Portugal’s southern coast is a good place to live. The Algarve offers residents and visitors the opportunity to enjoy its natural beauty, delicious local food, and laid lifestyle at an affordable cost of living. In addition to Portugal’s efficient healthcare system and inclusive local culture, especially found in Southern Portugal, you will be able to find affordable rental prices among the traditional Portuguese houses and more modern rental property options.
