Housing market in Portugal
Portugal’s housing market is now strengthening, thanks to a sharp recovery in demand amidst improving economic conditions and the Algarve region is a major investment property hotspot.
Thanks to its sunny days, the beauty of its natural areas and the honour of its cities, Portugal has long been a top overseas property destination for other Europeans, especially the British. Portugal’s housing market is now strengthening, thanks to a sharp recovery in demand amidst improving economic conditions and the Algarve region is a major investment property hotspot.
Nearly 50,000 homes were sold in the fourth quarter of 2020, a historic quarterly record in Portugal. According to the National Statistics Institute (INE), the number of homes sold in 2020 was 171,800, 5.3% less than in the previous year. While this was the first decrease in the number of housing transactions registered in Portugal since 2012, it is nonetheless the third best year since 2009.
During the year to October 2021, the median price of housing in Portugal surged 10.61% (8.63% in real terms) to €1,251 per square meter – almost twice the y-o-y growth of 5.8% recorded in October 2020, according to figures released by the Instituto Nacional de Estatistica (INE).
Property prices in Portugal started to recover in 2014 and have been rising since. House prices rose by 4.9% in 2015, 5.7% in 2016, 7% in 2017, 9.7% in 2018, 11.7% in 2019 and 6% in 2020.
In Lisbon metropolitan area, property prices were up by 10.31% (8.33% in real terms) in October 2021 from a year earlier, to a median price of €1,659 per sq. m.
- In the North, the median property price rose strongly by 9.16% y-o-y in October 2021 (7.21% in real terms), to €1,084 per sq. m.
- In the Center, property prices rose by 6.15% y-o-y in October 2021 (4.25% in real terms), to €880 per sq. m.
- In Alentejo, property prices rose by 5.69% (3.8% in real terms) y-o-y to €873 per sq. m.
- In Algarve, property prices rose by 7.94% (6% in real terms) y-o-y to €1,673 per sq. m.
- In the Azores, property prices increased 2.04% (0.21% in real terms) y-o-y to €951 per sq. m.
- In Madeira, the median property price rose strongly by 9.54% (7.58% in real terms) y-o-y to €1,286 per sq. m. in October 2021
By region, Alentejo had the biggest surge in the number of housing transactions, registering a y-o-y increase of 35% in the first three quarters of 2021, followed by Centro (28.7%), Algarve (26.8%), Norte (24%), and AMLisbon (22.1%).
In the autonomous regions of Madeira and Azores Islands, housing transactions also increased 38.6% and 18.2%, respectively.
As of October 2021, Portugal’s nationwide house prices were about 40% above their previous nominal peak, seen in 2010. The housing market began to recover in Q4 2014, after 13 consecutive quarters of y-o-y house price declines.
By region, AM Lisbon’s house prices are now about 50% above its previous peak. Also, house prices in both Algarve and the North are now more than 40% up. House prices in the Centre are up by 20%. In Alentejo, prices are now above their previous peak by about 7%.
Likewise, house prices in the autonomous regions of Azores Islands and Madeira are up about 11% and 13%, respectively.
The two areas of the country with the highest house prices in Portugal in 2022, the Algarve and Lisbon, were those that saw foreigners make the biggest purchases when it comes to property price. The average price of properties purchased by those who aren't residents in Portugal, and therefore have their tax address abroad, was more than double the price of houses purchased by those who are residents in Portugal. In the Algarve, for example, foreign buyers paid an average of 2,547 euros/m2 and in Greater Lisbon 4,283 euros/m2. On the other hand, residents in Portugal paid 1,969 euros/m2 in the Algarve and 1,858 euros/m2 in Lisbon on average.
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