Portuguese Real Estate Market Shows Healthy Increase in September

The average price of Portuguese property in September 2021 was up 1.4% on the average price of August.  According to the Imovirtual property barometer, the average property price across Portugal has risen from 365,264 euros in August 2021 to a September high of 370,372 euros. Lisbon is the most expensive area in which to buy property, its average property price, up 11% since September 2020, now stands at 592,960 euros. One of the most affordable areas in the country is Guarda, where the average property price is just 112,108. Only one area in the country had a significant drop in price during the month of September, and this was Evora, however, this location has still seen an 18.1% average price increase since September 2020.

The Portuguese property boom began in 2012 with the introduction of Portugal’s Golden Visa scheme. It was one of several such schemes, launched by European countries, but it was by far the most generous, enabling a foreign purchaser of property valued in excess of property worth 350,000 euros, to residency rights for them and their dependents, travel within the Schengen area and the option of a full Portuguese passport in just five years. Since it was introduced, the scheme has generated 5.6 billion euros for the Portuguese economy and enabled around 10,000 foreign buyers to obtain residency rights for themselves and their families.

What is perhaps surprising is the continued buoyancy of the Portuguese property market throughout the period of the pandemic. Demand for property grew by 96.8% between March 2020 and March 2021 and in the first three months of 2020 investors from 49 different countries bought property valued at 238.8 million euros, though a third of the buyers were Chinese investors. Lisbon, Porto and the Algarve remain the key areas of interest for foreign investors and despite sustained price rises, Portugal still has some of the lowest city centre prices in Europe. Foreign investors often buy property in order to rent it out because in order to qualify for their residency rights an investor need only spend a minimum of seven days in the country. Rental returns in Lisbon and the Algarve have been good but the pandemic has hit the rental sector hard and there has been a consequent drop in rental prices.

A factor which may be driving current property sales in Portugal is the announcement by the Portuguese government that the criteria for the Golden Visa scheme will change from January 1^st, 2022. From this date the Golden Visa scheme will only be applicable to areas in the interior of mainland Portugal as well as the Azores and Madeira. In other words, foreign investors will no longer be encouraged to acquire property in the key tourist areas of Lisbon, Porto and the Algarve. The minimum investment limit will also increase from 350,000 euros to 500,000 euros.  The clear intention of the Portuguese government is to use the scheme to drive investment and regeneration in the fine ancient cities of the country’s interior. Whether this will be as appealing to foreign investors remains to be seen.