Portugal remains a haven for overseas property buyers. Whether people are looking for a permanent residence, a holiday home or an investment, this market has properties to suit everyone’s requirement.
The main property hot-spot of Portugal remains the Algarve and the region surrounding Lisbon where the majority of foreigners buy their property.
Below a brief guide concerning prices, property taxes and ways to finance an investment.
Prime property prices in the Algarve are among the highest of the country, ranging from € 3,400 to € 4,000 per square metre having more than doubled since 1999.
In the Lisbon area, they range from € 2,500 to € 3,100 per square metre.
In addition to size and quality, the key element influencing the price is the location. You will find that, the closer to a major city or beach, the more expensive it will be. Properties on a beach side or on a golf course resort sell at a premium.
After an increase up to 2004, the prices of residential dwellings in Portugal have stagnated, and are actually declining since 2008. The national average price per square metre fell from € 1,245 in June 2006 to below € 1,220 in 2008 according to the National Statistics Institute (INE).
The Lisbon region average price was stagnant in 2007, rose 1.3% in 2006, 1% in 2005 and declined 1.86% in 2004.
Prices in he Algarve have, in recent years, been rising faster than in the rest of Portugal. But in 2007 things turned around, and they rose only 0.13%, after a 6% price increase in 2006. Houses performing better than apartments.
House prices in Portugal are expected to increase during the next five years. The average price per square metre (€ 1,150 € - Q3 2008) is expected to approximate the Spanish average (€ 2,065 Euros - Q3 2008) due to the increase of Spanish investors in Portugal.
The Portuguese real-estate market is extremely varied and the purchaser has a plethora of properties to choose from: from small studios to huge mansions set in hectares of land. There are more and more restoration projects of traditional houses such as “quintas” (farmhouse) or “solares” (manor house).
Before buying a plot of land, make sure that it holds valid planning permission and whether any building restrictions exist which may limit what can be done on the land. Organize a site appraisal of the land and have a surveyor measure it and confirm the boundaries. This will assess the suitability of the land for building. The size of the property and light orientation will also have to be taken into account when selecting a plot.
There are many types, sizes and quality of apartments in Portugal.They vary from tiny studios built in the 70’s in a dormitory campus to a luxury complete floor apartment facing the ocean with a view on a golf course located in the Algarve.
Of course prices are quite different as well, they vary from less than € 70.000 for a studio to over a million for a luxury apartment.
The buyer of an apartment becomes a de facto member of the community of owners of the building which is required, by Portuguese law, to have its own set of statutes specifying e. g. which part is owned privately and which part is owned communally, the community regulations and fees, etc. It is therefore highly recommended to analyse these rules as well as the general Portuguese governing law (Lei de Propriedade Horizontal) before making a decision.
When a property is not a mansion, a “palacete” (palace) or a villa built inside a resort, houses in Portugal are usually built on small plots of 350 – 500 square metres which leave very little space to enjoy a garden and make it impossible to have a swimming pool.
Quality construction which was quite poor until the mid 80’s has increased a great deal since then, due to the introduction of new regulations for new house building. For example, it imposes earthquake-proof structures, double insulated walls and double windows.
Prices vary from 150.000 € for a small 2 bedroom house in the country to well over a few million € in the Lisbon or Algarve area.
Townhouses consist of a row of homes sharing common walls. The townhouse concept is quite new in Portugal and has been a feature of some of the new resorts.
Townhouses include individual ownership of the land but can also have common elements, such as a swimming pool and a garden, which have shared ownership. If integrated into a resort or a condominium, the rules of community property apply.
Prices range from € 100.000 for a studio to over € 400.000 for a 3-4 bedroom house in a luxury resort.
These are national averages price which can vary greatly according to the region, cheaper prices in rural areas, higher in fashionable zones like golf resorts or front beach resorts. Average prices by region are listed below.
Bedrooms
|
||||||
0
|
1
|
2
|
3
|
4
|
5/6
|
|
Studio
|
€ 80,000
|
|||||
Apartment
|
€ 110,000
|
€ 150,000
|
€ 210,000
|
€ 270,000
|
||
Townhouse
|
€ 135,000
|
€ 150,000
|
€ 210,000
|
€ 300,000
|
||
Detached villa
|
€ 250,000
|
€ 380,000
|
€ 510,000
|
€ 750,000
|
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| Prices in Euros (€) |
1-bedroom
|
2-bedrooms
|
3-bedrooms
|
4-bedrooms
|
Lagos
|
81,000 | 117,000 | 153,000 | 198,000 |
Praia da Luz
|
135,000 | 162,000 | 243,000 | 360,000 |
Sagres
|
144,000 | 180,000 | 288,000 | 351,000 |
Albufeira
|
90,000 | 126,000 | 180,000 | 207,000 |
Vilamoura
|
166,500 | 234,000 | 288,000 | 351,000 |
Quinta do Lago
|
315,000 | 477,000 | 630,000 | 810,000 |
Vale do Lobo
|
225,000 | 378,000 | 711,000 | 702,000 |
Faro
|
108,000 | 126,000 | 153,000 | 225,000 |
Tavira
|
99,000 | 108,000 | 144,000 | 171,000 |
Castro Marim
|
81,000 | 126,000 | 189,000 | 225,000 |
Silver Coast
|
90,000 | 117,000 | 144,000 | 189,000 |
Coimbra
|
81,000 | 90,000 | 126,000 | 171,000 |
Figueira da Foz
|
90,000 | 108,000 | 144,000 | 225,000 |
Aveiro
|
90,000 | 99,000 | 117,000 | 189,000 |
Lisbon
|
126,000 | 171,000 | 198,000 | 252,000 |
Cascais
|
126,000 | 162,000 | 207,000 | 315,900 |
Estoril
|
117,000 | 162,000 | 270,000 | 369,000 |
Sintra
|
90,000 | 108,000 | 153,000 | 189,000 |
Blue Coast
|
72,000 | 99,000 | 126,000 | 162,000 |
Vila Nova de Milefontes
|
90,000 | 99,000 | 144,000 | 180,000 |
Zambujeira do Mar
|
117,000 | 135,000 | 171,000 | 243,000 |
Alqueva Dam
|
72,000 | 81,000 | 108,000 | 144,000 |
Douro River
|
63,000 | 90,000 | 162,000 | 144,000 |
Porto
|
81,000 | 108,000 | 135,000 | 252,000 |
Costa Verde
|
63,000 | 99,000 | 117,000 | 144,000 |
| Prices in Euros (€) |
1-bedroom
|
2-bedrooms
|
3-bedrooms
|
4-bedrooms
|
Lagos
|
279,000 | 360,000 | 558,000 | 855,000 |
Praia da Luz
|
261,000 | 495,000 | 558,000 | 891,000 |
Sagres
|
355,500 | 378,000 | 450,000 | 576,000 |
Albufeira
|
189,000 | 315,000 | 603,000 | 900,000 |
Vilamoura
|
306,000 | 432,000 | 495,000 | 738,000 |
Quinta do Lago
|
504,000 | 630,000 | 855,000 | 1,080,000 |
Vale do Lobo
|
450,000 | 540,000 | 657,000 | 855,000 |
Faro
|
234,000 | 342,000 | 450,000 | 648,000 |
Tavira
|
144,000 | 198,000 | 252,000 | 342,000 |
Castro Marim
|
279.900 | 648,000 | 909,000 | 1,233,000 |
Silver Coast
|
180,000 | 306,000 | 423,000 | 720,000 |
Coimbra
|
99,000 | 198,000 | 297,000 | 459,000 |
Figueira da Foz
|
180,000 | 234,000 | 288,000 | 297,000 |
Aveiro
|
189,000 | 333,000 | 459,000 | 486,000 |
Lisbon
|
234,000 | 252,000 | 297,000 | 603,000 |
Cascais
|
234,000 | 513,000 | 558,000 | 1,080,000 |
Estoril
|
225,000 | 459,000 | 477,000 | 855,000 |
Sintra
|
189,000 | 288,000 | 432,000 | 810,000 |
Blue Coast
|
162,000 | 225,000 | 378,000 | 612,000 |
Vila Nova de Milefontes
|
121,500 | 198,000 | 279,000 | 495,000 |
Zambujeira do Mar
|
225,000 | 378,000 | 540,000 | 684,000 |
Alqueva Dam
|
180,000 | 288,000 | 630,000 | 702,000 |
Douro River
|
144,000 | 198,000 | 252,000 | 342,000 |
Porto
|
279,000 | 648,000 | 918,000 | 1,242,000 |
Costa Verde
|
396,000 | 612,000 | 657,000 | 1,197,000 |
Obtaining a mortgage (hipoteca or crédito de habitação) from a Portuguese bank is not a problem anymore even for non-residents or for off-shore companies. Portuguese banks' offers can therefore be compared with others.
Since the payment will be done in Euros, it is advisable to subscribe a loan in that currency else, a speculative dimension is added to the investment.
Euro mortgages interest rates are usually established based on the Euribor (the European inter bank interest rate set by the European Central Bank) plus a negotiable spread of 1% to 2%.
In order to apply for a mortgage from a Portuguese bank, documents such as, proof of monthly income, bank references and bank statements (minimum 3 months), certified copy of the passport, proof of residence, utility bills, Portuguese fiscal number, and property documents. Some banks also require a life insurance covering the purchaser.
Mortgages are granted on a percentage of the property valuation made by the lender’s expert, which may be less than the purchase price. The maximum mortgage in Portugal is usually between 75% and 80% of the valuation price for a maximum term of 25 – 30 years and the term can only last until the borrower reaches the age of 70. However, it happened that some residents were granted mortgages up to 90% for a term of 40 years.
The fees associated to the purchase are not included in the valuation.