Portugal is a country where ‘doing nothing’ is an art form. The Italians say ‘dolce far niente’, but the Portuguese win this do-nothing contest easily. The French must be attracted to this attitude because they are the most numerous buyers for a property in Portugal (26%). Then come the English (19%), Chinese (13%), Brazilians (8%), Belgians (5%), Swiss (4%), Russians, Dutch and Ukrainians (who each represent 3%) and many others like the Swedes, Irish, Spanish.
Most people who ask for loans are between 18 and 40 years old, have completed higher education and work for other companies, says BdP (Banco de Portugal). Regarding the sociodemographic characterisation of people who took credit from resident financial institutions in 2023, the BdP confirms that fewer families were taking out housing loans. “In 2023, 117,000 people took out a permanent home loan, 30,000 fewer than in 2022”.
Most of those taking out a mortgage were Portuguese (91%). And around 61% of the 117,000 people were young, aged between 18 and 40. The majority worked for others (80%) and had a higher level of education (55%). What also stands out is that half lived in Greater Lisbon, the Porto Metropolitan Area and the Setúbal Peninsula.
Who is buying real estate in Portugal? And why?
Portugal has a stable economic climate and investment-friendly policies. The economy has demonstrated remarkable resilience recently, with steady GDP growth and low inflation. This stability and favourable investment policies make Portugal an attractive destination for international investors.
Portugal enjoys a warm, sunny and consistent climate that’s much envied by those in gloomier parts of Europe. Lisbon is the third sunniest city in Europe, with an average of around 2800 hours of annual sun.
The winter is short and mild, and the summer is long and hot. However, Portugal’s climate is more varied across different regions than some expect. This presents plenty of options for those who want something slightly different from the long, hot summers of the Algarve. Portugal’s weather, especially in the south, creates a place where people can enjoy pavement cafés and beach life (almost) all year round. It’s a perfect destination for those who turn seasonally affected during long, dull winters. Buying property in Portugal offers an escape from the doldrums – whether for a permanent move or a sunny bolthole.
Property prices rising
Recent data showed Portugal’s property prices rising 17.1% year-on-year. While it seems unlikely that such stratospheric rises will continue, there’s little to indicate speculation of a “crash,” as in several other countries.
Ricardo Guimarães, director of Confidencial Imobiliário, recently said that “there continues to be a structural lack of supply and that demand, even if in a possible slowdown, remains higher than the product replacement capacity, in an imbalance that sustains the continuity of rising prices.”
Portugal has a large and settled community of overseas residents, many of whom speak the language and are well-integrated with their local communities.
New buyers can choose between established “expat areas,” complete with widely spoken English and all the comforts of home, or places off the beaten track where they can still expect to be welcomed with open arms.
Resident Tax advantages for foreign buyers
Even though Portugal recently ceased its Golden Visa scheme, moving to Portugal has plenty of financial benefits. The Non-Habitual Resident tax scheme allows qualifying new residents to benefit from a flat tax rate on Portuguese income and pay no tax on foreign-sourced income for up to ten years.
In addition, there’s no inheritance tax in Portugal, although it’s worth noting that stamp duty is charged to beneficiaries on Portuguese assets—good financial advice is essential.
At the time of writing, there is some controversy about short-term rental property in Portugal—specifically, about the impact Airbnb-type rentals have on the availability of homes for permanent residents.
However, regardless of the situation, there’s an unstoppable demand for rental homes in Portugal. The government is even incentivising owners willing to provide residents with long-term rentals.
The upshot is that property in Portugal is in strong demand from renters—both tourists and locals. This provides excellent reassurance for investors who don’t intend to live in their Portuguese home full-time or those whose plans may change.
Portugal is super chill
Portugal was ranked sixth out of 163 countries in the 2023 Global Peace Index. This index considers a wide range of factors, including political stability, incidents of violent conflict, homicide rates, and terrorist incidents.
By contrast, the United Kingdom ranked 34th, and the USA 129th.
Portugal’s safe and peaceful feel is noticeable. Many people say it feels like the UK of many decades past, with a sense of respect for elders and authority that is considered lacking elsewhere.
Most sold properties in Portugal
Most people in Portugal choose to buy a house. Indeed, the country’s ownership rate rose from 73.9% in 2019 to 77.3% in 2020. Some advantages to purchasing property in Portugal include An excellent financial investment in a dynamic, robust market with a high return on investment potential. It has a low cost of living compared with other Western European countries. It has a sublime climate with incredible summers and mild winters.
The most recent data from Eurostat reveals that property prices in the eurozone are falling, and houses became 1.1% cheaper in the last quarter of 2023 compared to the previous quarter. However, property prices continue to rise in Portugal, and the country saw the fifth-biggest increase among all other EU countries.
Is property cheaper in Spain or Portugal? Property in Portugal is more affordable than in Spain. With attractive rental yields in Lisbon and the Algarve, you can understand why Portugal is such a popular choice for investors.
Where do people buy a property in Portugal?
40% of Americans who decided to invest in Portugal have chosen Lisbon to buy property due to competitive prices and a number of other factors, including security, climate, quality of life, and the high quality of health and education services.
It makes sense to consider buying a property on the Algarve coast as this is a popular destination due to the climate, beaches and culture. If you want to experience life in a beautiful coastal area where many other foreigners have bought a home, the Algarve is for you.
Alternatively, if you plan to buy an investment property, this is the perfect region for holiday rentals (both summer and winter) for thousands of tourists visiting the Algarve annually. Portugal’s capital, Lisbon, is another accessible destination to consider if you prefer to keep away from the tourist hot spots. The average price per square metre is around €54837. That being said, Lisbon can still be a great place to invest, and the day you decide to sell, you’ll quickly find a buyer.
If you have a larger budget and you’re looking to invest in the higher-end property market, Cascais is one of the best seaside towns in Portugal. This fishing town is around 35 minutes by train from Lisbon, and the marina provides beautiful coast views. The demand in Cascais is high, so anything you buy here will be a solid investment.
| Lisbon | It’s more affordable than Lisbon. Many attractions and easy to get to with low-cost flights. |
| Porto | It’s more affordable than Lisbon. Many attractions are easy to get to with low-cost flights. |
| Algarve region | Easier to rent than buy, but a great summer destination. |
| Cascais | Higher prices, but a sound investment. Suitable for city lovers. |
What steps to take
Investing in real estate abroad is an exciting endeavour, and Portugal has emerged as a top choice for many international buyers. With its stunning landscapes, welcoming culture, and a relatively straightforward property acquisition process, Portugal, including regions like the Algarve and Lisbon, has become an attractive destination for foreigners looking to purchase a home. In this comprehensive guide, we’ll walk you through the step-by-step process of buying property in Portugal as a foreigner, helping you navigate the journey smoothly.
1. Define Your Objectives and Budget
Before diving into the property market, it’s essential to establish your objectives and budget. Determine whether you’re buying a vacation home, a rental property, or a permanent residence. Understanding your goals will guide your property search and financial planning.
2. Seek Professional Guidance
Engage local real estate agents working with Living on the Cote d’Azur. When the property is found, connect with a lawyer and financial advisor specialising in international real estate transactions. Their expertise is invaluable in navigating property acquisition’s legal and financial aspects. Find Portugal real estate lawyers here
3. Choose the Right Location
Portugal offers diverse locations, from bustling cities to tranquil coastal towns. Research and explore different regions to find the one that aligns with your lifestyle and investment goals.
4. Property Search and Viewing
Start your property search online, attend property expos, or work with local agents to find listings that match your criteria. Schedule property viewings to inspect potential investments in person or arrange for trusted representatives to view properties on your behalf.
5. Make an Offer
Once you find the property of your choice, it’s time to make an offer. Your agent or legal advisor will assist in negotiating the terms, including the purchase price and conditions.
6. Due Diligence
Conduct due diligence on the property to ensure no legal issues, encumbrances, or hidden problems. This includes verifying the property’s title deed, land registry records, and permits.
7. Legal Representation
Hire a Portuguese lawyer who specializes in real estate transactions. They will guide you through the legal processes, review contracts, and ensure all necessary documents are in order.
8. Financing
Explore mortgage options with local banks or international lenders if you require financing. Compare interest rates, terms, and conditions to secure the best mortgage.
9. Promissory Contract
Once the offer is accepted and due diligence is complete, you’ll sign a promissory contract (Contrato Promessa de Compra e Venda). This legally binding agreement outlines the sale’s terms, including the purchase price, payment schedule, and closing date. At this stage, you’ll typically pay a deposit, usually 10% of the property’s price.
10. Property Registration
The next step involves registering the property in your name. Your lawyer will handle this process, ensuring the property is transferred legally.
11. Property Transfer Tax
Pay the property transfer tax (Imposto Municipal sobre Transmissões Onerosas de Imóveis) to the local tax office. This tax is based on the property’s value and is typically paid by the buyer.
12. Final Deed (Escritura)
The final step is signing the Escritura, the official deed of purchase. This occurs at a notary office, and both the buyer and seller must be present, or you can grant power of attorney to your legal representative. The remaining balance is paid, and the property officially changes hands.
13. Property Ownership and Taxes
After the Escritura, you’ll be the legal owner of the property. Be aware of property taxes, such as the annual IMI (Imposto Municipal sobre Imóveis), based on the property’s tax value.
14. Enjoy Your New Home
With the property officially yours, it’s time to enjoy your new home in Portugal. Many foreign buyers rent out their properties when unused, providing an additional income stream.
Conclusion
Purchasing property in Portugal as a foreigner can be straightforward and rewarding, thanks to the country’s investor-friendly policies and robust property market. By following this step-by-step guide and enlisting our team’s expertise, you can confidently navigate the intricacies of buying property in Portugal. Whether you’re seeking a holiday retreat, a rental investment, or a new permanent residence, Portugal offers a welcoming and beautiful destination for international buyers. From Living on the Cote d’Azur, we are in Lisbon, Cascais, Porto and the Algarve to assist you.
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