Blog

INE reported that by the end of 2021, the annual rate of price change had increased in seven out of eleven Greater Lisbon area municipalities with over 100,000 residents, with increases in Setúbal (+9.8%), Loures (+3.0%), Almada (+2.2%), and Oeiras (+2.1%) exceeding the rate of change seen at the national level (+1.9%).

Municipalities in the Porto Metropolitan Area, including Maia (+10.5%) and Vila Nova de Gaia (+8.1%), also saw greater year-on-year growth than Portugal. For example, “the acceleration was less expressive” in Lisbon (+0.4%) and Oporto (+0.9%).

Additionally, the high demand for high-end and luxury products has persisted in previous years, and this trend is expected to continue. 

Supply may continue to fall short of demand for various reasons, including slow licensing processes in most National City councils and increased difficulty in obtaining construction credit.

House prices in Portugal have been volatile because of the coronavirus pandemic, creating an ideal buying environment for foreigners in 2021. 

A recent article in The Portugal News reported that Portugal’s general cost of living would increase by 13.8% in 2021.

In addition, PWC has ranked Lisbon as the sixteenth most appealing city to make Real Estate investments in 2022. Not only have home values rise, but so have rental profits. 

There’s a D2 visa in Portugal, also called Immigrant Entrepreneur Visa, and it’s to grant residence authorization to foreigners who have conducted investment operations or who can demonstrate that they have financial resources in Portugal, including financing obtained from a Portuguese financial institution and who have the intention of conducting investment operations on Portuguese soil.

The real estate market in Portugal is expanding quickly. Property values are increasing because of a shift from older, more expensive construction methods to more modern, less efficient, but more desirable ones. 

Our econometric models show that the Portugal Residential House Price Index will average around 190.98 points in 2023 and 193.27 points in 2024.

Investing in a rental property in Portugal could be a wise choice. It is worthwhile to do so now, as there is greater demand for lodging than supply, especially in Lisbon and Porto. The high returns from tenants during the busy tourist season also make renting out property a good option.

This environment, which the conflict in Ukraine has exacerbated, is reflected in the pronounced increase in construction prices, causing a slowdown in industrial activity, a reduction in supply in the medium term, and a subsequent increase in the prices of already-built homes. 

Back in February the Portuguese Prime Minister, Antonio Acosta, announced that the residential version of Portugal’s popular golden visa, which leads to EU residence, would be rescinded. Residence visas through financial or commercial investment, digital nomadism, or retirement would be unaffected.

The core problem with the residential golden visa was that it was perceived to be squeezing ordinary Portuguese out of their own housing market. The numbers certainly bear this out; Portuguese housing costs have nearly doubled in the last decade.

A related but unquantifiable problem was that EU authorities in Brussels were becoming increasingly concerned that golden visa programmes were allowing potentially unsuitable people to become EU residents.

In terms of the Portuguese government process, however, this is not something the Prime Minister can change unilaterally. Only parliament can approve the final revisions.

Since Acosta’s announcement, a wide range of industry associations, property developers, constitutional lawyers, regional governors, and public groups have pushed back against the bill.

Objections from self-interested real estate agents and property developers are easy to understand. But it turns out that regional governments of some parts of Portugal had come to depend on the economic activity spurred by the golden visa programme. The government of the semi-autonomous island of Madeira, for example, outright rejected the bill and said it would not enforce its provisions in areas under its jurisdiction.

One of the most contentious parts of the original submission was to cut off the programme as of February 16, voiding all applications submitted after that date. Given that many potential applicants only submit the visa application once a property deal has been concluded, this threw property transactions across the country into instant turmoil.

Under pressure, the government has now agreed to allow the programme to continue as is until final legislation is passed and promulgated. Applications currently in the pipeline will fall under the existing rules.

Another problematic aspect of the proposals was that property-based golden visas not yet issued would be converted to D2 entrepreneurial visas. When holders of current golden visas apply for renewal, they would also be converted to the D2 visa. The problem is that these visas require 183 days of annual presence in the country.

Again, the government has backtracked. Applications in the pipeline will remain subject to the seven days a year presence test, as will renewals for current visa holders.

Finally, visas for investments in “cultural assets” will continue to be available. This is a broad category that has often been applied to applicants who propose to acquire and renovate run-down properties in more remote areas.

Under pressure, the government has now agreed to allow the programme to continue as is until the final legislation is passed and promulgated.

In other words, there is still time to initiate a golden visa application under the residential option.

One of the key reasons for the shift in attitude is a realization that appreciation of property prices and rental costs isn’t as closely linked to the golden visa programme as many had argued. Even though Lisbon and other popular areas were already excluded from the programme, housing costs in those areas continued to rise. This is probably an indirect consequence of the Golden Visa program, which has led to millions around the world thinking about Portugal as a potential residential option.

But the key dynamic appears to be the power of Portuguese domestic business interests that have grown around the visa programme. They were careful to take the high road in their arguments, appealing to constitutional considerations to argue that the government could not renege on agreements already concluded with existing and prospective visa holders.

Interestingly, Portuguese president Marcelo Rebelo de Sousa, whose office is nonpartisan, criticized the bill as being no more than a political ploy by the ruling party to try to attract voters concerned with the state of the housing market. That appeared to put the government on the back foot, encouraging them to negotiate the latest changes to the bill.

The text of the bill before parliament proposes to end the residential golden visa provision on the date the law takes effect. According to Portuguese legal sources, that’s likely to be at least a month away.

That means there is still time to initiate a residential golden visa application. But the clock is ticking…

Press Release

Portugal property prices were expected to decrease, however dueto positive steps by the country the property industry has not only been sustained but continues to rise.

Apartments are clearly favoured among foreign investors in the Algarve. Property used for holiday rentals are among the most interesting and popular real estate in the Portuguese market with many investors purchasing to see a return on their investment. Across the Algarve places such as Albufeira, Vilamoura, Quinta do Lagoand Vale de Lobo are some of the more popular locations for those looking to invest.

There are no restrictions on foreign property buyers in Portugal and transaction costsare fairly low typically 6% of purchase price. Since 2012, non-European investors have also been entering the Portuguese property market in increasingly large numbers due to the introduction of the Golden Visa, which enables property investors to obtain residence permits.Between October 2012 and June 2016, foreign investors obtained over 3,400 residency permits.

The total cost of the residential property acquired by these investors amounted to approximately €1.9 billion, the average amount invested by the buyer was about €580,000.

Analysts are positive about the Portuguese property market going forward due to its proven record of resilience and relatively low property prices. It didn’t suffer through a housing bubble prior to the 2008 crisis and its housing prices stayed afloat during the recession, Portugal’s current market boasts prices that are particularly attractive when compared to others within the European market.

If your ready to learn more about buying or investing in Portugal, we look forward to helping you throughout the process.