Last update of this post: October 04, 2022
The Portuguese property market in 2022
After this period of the pandemic, the property market in Portugal has recovered rapidly in 2021, with a high number of transactions and prices continuing to rise.
House sale prices rose by 13% in the first quarter of 2022, with the highest increase for twelve years, continuing the rise seen between March 2020 and January 2022, with an increase of 27.5%, a record in Europe.
The reason for this increase is the country’s popularity with international buyers, in particular, European and North American buyers looking for a better quality of life, with property prices that remain cheaper than in most major Western metropolises.
While this trend for the country was already present before Covid-19, the pandemic has reinforced this interest.
Lisbon is the city that most attracts these foreign investors, who invested a record 920 million euros in the capital’s properties last year. They accounted for almost 40% of the residential property market. Americans have been the top international buyers in Lisbon for the past two years, choosing the Portuguese capital as their new fashionable destination and overtaking French buyers on the podium, followed by the Chinese and the British.
Madeira Island is the second fastest growing area, followed by the Algarve region, which also grew by at least 10%. Alentejo is the area in Portugal with the “lowest” growth, with an increase (still) of 5%.
All these assets contribute to a high quality of life when considering Portugal as a permanent or holiday home location.
|Location||Average price per sqm|
|Lisbon Downtown||4 800€|
|Silver Coast / West Coast||2 200€|
|Algarve / South Portugal||3 900€|
At a time of crisis in Portugal, is an investment really appropriate?
For example, the financial commitment required is a lot less important than for a property investment in France. In addition, a deep-rooted trend has emerged in the present economic conditions: a rise in the demand on the rental market. Because of the difficulties in financing their purchases, the Portuguese rely more and more on rented accommodations, which ensures a good rental level, both in terms of prices and the selection of candidates.
Finally, the Law on the eviction of bad paying tenants has just been updated and is now very favourable to owners, which makes rental investment safe and profitable.
Returns are good compared to some cities such as Paris or London where high square metre prices are capping the average rental returns to approximately 3%.
Lisbon can offer average returns between 5% to 10% for rental apartments for individuals.
In commercial real estate, it is not uncommon to see the return rate climb up to 12%.
Portugal therefore has strong long-term assets and you will find excellent opportunities on the market today.
The increase in house prices in Portugal in recent years has been very moderate.
Thus, between 1998 and 2011, house prices in Portugal grew very moderately, unlike other euro area economies.
As early as 2008, Spain and Ireland, frequently compared to Portugal, recorded sharp price falls in the housing market. In contrast, in Portugal, house prices remained relatively stable.
All the data analysed show that Portugal has not experienced a speculative bubble in the real estate market and value the absence of overvaluation of housing.
The real estate market is therefore quite secure: the absence of overvaluation of housing reduces any future price corrections.
The real estate sector in Portugal therefore represents a solid investment.
The current circumstances of the Portuguese economy are favourable to the development of the rental market, the rental law has been reformed making the rental market more dynamic. It has made it possible to simplify and speed up eviction procedures, among other things.
The Portuguese real estate market is characterised by a good quality of supply and relative price stability. It represents a solid investment option, particularly in the residential tourism sector.
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