According to the latest figures from the Portuguese National Statistics Institute (INE), Portuguese property prices rose by more than 9% in 2017, following a 7% increase in 2016. So there is an acceleration and one that will probably be sustainable since the conditions for this hot streak are still excellent. The steps to buy a property are still relatively simple.
Brief history of the Portuguese real estate market
After 5 years of crisis, the Portuguese real estate market recovered in 2013. The recovery gained momentum in 2015 thanks to low interest rates and sales soared by 30%.
It must be said that real estate prices had fallen by 30% between 2008 and 2012. the market has therefore made a saving correction for an entire country.
The French take full advantage of the Portuguese real estate market
In 4 years, the number of French people living in Portugal has multiplied by 5 to reach today the figure of 50,000. According to the Chamber of Commerce, they are about 80% retired people attracted by the tax exemptions on their pensions.
The French are not the only ones to take advantage of the windfall. Of the 50,000 transactions concluded in Portugal in the first half of 2016, 20% involved foreign buyers. Of these 12,500 sales, 25% were taken by French, 18% by British and 13% by Chinese.
The British were for a long time the leaders in this market but they have been overtaken in the space of a few months by a highly motivated French diaspora. The number of acquisitions by French people has increased by 30% in one year.
What is the budget for buying in Portugal?
The average investment is between 200,000 and 250,000 euros, which is the equivalent of a 125 m² house near the coast.
A budget between 750,000 and one million euros, allows you to acquire a luxury residence of 270 m² on a plot of 500 to 1000 m² with swimming pool and near the sea.
A haven for retirees and entrepreneurs
The majority of French retirees who buy in Portugal have an average pension of 1400 euros per month.
But retirees are not the only ones attracted to Portugal. French entrepreneurs are active in the tourism sector, the real estate sector and in the personal services sector and – gastronomy obliges – a growing number of restaurants, bakeries, cafés etc. are set up by French people.
Artists such as Florent Pagny or Philippe Starck have chosen Portugal perhaps to benefit from a tax exemption on dividends, interests and capital gains and to benefit from an income tax limited to 20% against 45% for France. And all this under a mild climate…
Which regions are the most dynamic?
Lisbon and Porto concentrate 64% of real estate transactions for the equivalent of 19 billion euros of transactions. The Algarve is the third region in terms of number of transactions and accounts for 9% of the number of properties sold in 2017.
In the center of Lisbon, prices are around 4500 euros per square meter. In Porto, appreciated for its historic center, prices are 20% cheaper than in Lisbon with great opportunities for buildings to be renovated to realize nice capital gains.
What does the future hold for Portuguese real estate?
If the government maintains the RNH status and the exemptions, the upward trend should be confirmed in the long term. But the pressure from European neighbors, annoyed by the tax dumping on their doorstep, may end up paying off.
In the meantime, Portugal is not about to let go of the piece as the benefits are so beneficial. The country is seriously considering the introduction of a municipal property tax proportional to the amount of natural light and the quality of the view enjoyed by the home concerned. A sort of sunshine tax.
These provisions were part of the 2017 budget proposal, it has not been retained at this time.
We believe that in 2018 and 2019, prices will continue to rise, albeit in a slightly less outspoken manner. The lesser known neighborhoods still offer great opportunities for renovation, while some of the more upscale neighborhoods are already flirting with the price per square meter in the largest European capitals.
