portugal real estate

Portugal Real Estate: Ultimate 2023 Guide For Expats & Investors

Portugal has long been a popular destination for tourists, and in recent years, it’s become increasingly popular with buyers looking for a second home or investment property.

There’s a wide range of Portugal real estate options available, from historic city apartments to coastal villas.

And with its Mediterranean climate and relaxed lifestyle, it’s easy to see why Portugal is such an attractive destination.

What’s more, Portugal can still be great value for buyers, with prices that are relatively affordable when compared to other countries in Western Europe.

Although real estate prices in 2022 are rising, so you’ll have to move fast if you want to grab a bargain!

Whether you’re looking for a traditional stone cottage or a modern penthouse with ocean views, Portugal is worth considering as your next real estate purchase.

And, if EU citizenship is your long-term goal, investing in Portugal real estate offers an excellent way to get there.

The country offers several real estate based Golden Visa residency pathways, which we’ll explore later in this article.

Can foreigners buy property in Portugal?

Yes, absolutely. There are no restrictions on foreign buyers purchasing Portugal real estate, even if they are non-resident.

In fact, the Portuguese government positively encourages foreign real estate investment and has introduced appealing incentives, such as the Golden Visa program.

Portugal Real Estate Market Overview and Statistics

Prior to the 2008 financial crisis, the Portuguese property market was booming. However, the global economic downturn hit Portugal hard, and prices plummeted.

It wasn’t until 2014 that the market started to recover, and even then, growth was slow. In recent years, there’s been a renewed interest in Portugal real estate, driven in part by Brexit uncertainty along with American investors looking for a Plan B in Europe.

This has helped to push prices up, and they are predicted to continue to rise in the next few years.

The pandemic was an unprecedented event that caused a shakeup in the global economy. But in terms of real estate, at least at the moment, things are still booming.

In particular, European Union countries have seen an influx in new immigrants, particularly from the US and the post-Brexit UK, as well as global investors looking to establish a safety net in case of future political turmoil.

Americans Moving to Portugal

Recent years have seen a sharp rise in numbers of Americans moving to Portugal and entering the real estate market.

In fact, during 2021, the number of Americans living in Portugal increased by a huge 45%.

These new expats are mainly remote workers, young families, and retirees, many of whom feel uncomfortable with the current political direction of the United States.

Portugal Real Estate Prices

Although property prices in Portugal have traditionally been affordable compared to the rest of Europe, 2021/22 have seen unprecedented rises.

As with any country, location is a key driving factor in Portugal real estate pricing. It’s still possible to find bargains, but you may have to venture outside the main cosmopolitan centers to do so.

Previously, many foreign real estate investors have targeted Lisbon and Porto, along with the popular tourist region of the Algarve.

But with these three hotspots now ineligible for Golden Visa residential real estate investment, many prospective buyers are turning elsewhere, such as Madeira, the Azores, and the central areas of mainland Portugal.

Average Real Estate Prices in Portugal

CityAverage Price (€ per m2) – City CentreAverage Price (€ per m2) – Outskirts
Lisbon5,172.78 2,858.29 
Cascais5,873.33 3,457.50
Porto3,358.331,971.78
Funchal2,066.671,400.00
Braga1,816.67950.00
Coimbra2,199.671,433.00
Portimao1,856.501,706.60
Lagos3,337.933,166.24
Source: Numbeo

Portugal Real Estate: Where to Buy?

When narrowing down an area to buy Portugal real estate, you have a choice between highly populated urban centres, or a more rural lifestyle in the country’s central areas.

The latter will be much cheaper, but you’ll have to decide if the lifestyle would work for you. Some of the countryside villages can be very isolated, and you might be one of the only foreigners in town.

You could also consider going for the island lifestyle in one of Portugal’s autonomous regions: the Azores or Madeira.

Have a think about your key objectives with your property purchase.

  • Are you buying a house to live in during retirement?
  • Do you have a young family, (so schools would be a key factor)?
  • Are you a remote worker who needs good Internet access and a sense of community?
  • Are you buying investment property to rent out?
  • Will you use this property for starting a business?

To help you get a feel for the country, here’s an overview of some top destinations for Portugal real estate buying in 2022.

Lisbon

It’s pretty cliché to start with the capital, but Lisbon remains a highly popular choice for real estate purchase.

Lisbon is one of the most picturesque cities in Europe, with its charming cobbled streets and pastel-colored houses. It’s no wonder that property prices have been on the rise in recent years.

As one of the oldest cities in Europe, Lisbon’s rich history is reflected in its architecture, culture, and food. The city has a vibrant nightlife and is home to a number of world-renowned museums and galleries.

However, there are a few things to consider before purchasing a property in Lisbon.

Firstly, the city can be quite hilly, which may not be ideal for those with mobility issues.

Secondly, parking can be difficult to find, and many streets are narrow and unsuitable for larger vehicles.

Finally, Lisbon’s famous nightlife can be noisy and disturbing for those who prefer a more tranquil setting.

Of course, you can always choose to live in one of Lisbon’s quieter suburbs, but keep in mind that noise can be problematic in the central downtown areas.

But despite these drawbacks, Lisbon is still a hugely popular destination, and property prices are likely to continue to rise.

If you’re thinking of buying a property in Lisbon, it’s worth considering all the pros and cons before making your decision.

Porto

In recent years, Lisbon has become increasingly crowded and expensive, driving many homebuyers to look elsewhere in the country for better value.

Enter Porto: Portugal’s second-largest city offers all the charms of Lisbon at a fraction of the price. Located just a short drive from the beach, Porto is well-connected to the rest of Europe by air and road.

And with a flourishing economy and excellent infrastructure, it’s no wonder that Porto is one of the fastest-growing cities in Portugal.

Add in world-class schools and a low crime rate, and it’s easy to see why Porto is quickly becoming the new hot spot for real estate buyers in Portugal.

If you’re thinking of buying property in Portugal, be sure to put Porto on your list!

Cascais

If you’re considering purchasing property abroad, Cascais, Portugal should definitely be on your radar.

This charming seaside town is located just a short distance from Lisbon, making it a convenient option for those who want to live close to the city.

Cascais is also home to a large expat community, so you’ll never feel alone in this welcoming town.

Safety is another top priority in Cascais – it’s consistently ranked as one of the safest cities in Portugal.

And of course, who could forget the gorgeous beaches? With over 30 miles of coastline, Cascais is a beach lover’s paradise.

Whether you’re looking for a peaceful place to retire or a fun-filled city for your family, Cascais is certainly worth considering.

The Algarve

Portugal’s Algarve region is renowned for its stunning coastal landscape and Mediterranean climate. In recent years, it has also become increasingly popular with property buyers from all over the world.

The region’s real estate market is currently enjoying a boom, with prices rising to reach Portugal’s most expensive average cost per square meter (€2,057), even ahead of Lisbon Metropolitan Area.

When it comes to price evolution, the Algarve is the only region of Portugal that has recorded year-on-year growth (+13.9 %) above the national level, according to the Portugal News.

However, it’s still possible to find bargains in more rural regions of the Algarve, such as Monte Gordo (the closest resort to the Spanish border), Tavira, or Olhão.

With its beautiful coastline, friendly locals, expat communities, and excellent infrastructure, the Algarve has everything you need to enjoy a relaxed Mediterranean lifestyle.

Funchal

Funchal, the capital of Madeira, is a great choice for buying real estate in 2022.

This beautiful city, set on a dramatic volcanic island in the Atlantic Ocean, has long been a popular tourist destination.

But in recent years, Funchal has also become increasingly popular with remote workers and second-home buyers, as well as retirees.

Funchal has a lot to offer, including a mild climate, beautiful scenery, and a vibrant culture. In addition, Funchal is extremely safe, and the cost of living is relatively low.

The city also has excellent infrastructure, a growing economy, and is home to a number of good schools and hospitals.

All of these factors make Funchal an appealing choice for those looking to buy property in Portugal.

Madeira is a beautiful island, and Funchal is the perfect base from which to explore all it has to offer, such as the thrilling hikes, water sports. and a diverse range of beaches.

So if you’re looking for a sunny escape that also offers great potential for future growth, Funchal should definitely be on your radar.

How To Find Real Estate Opportunities in Portugal

Most would-be buyers start looking for Portugal real estate opportunities through an agent (‘imobilaria’ in Portuguese) at one of the larger real estate firms, such as Century 21, ReMax, Keller Williams, or Sothebys.

The most popular website in Portugal for real estate opportunities is Idealista. It’s also useful to get a feel for what’s available in your target region.

Working with a real estate agent in Portugal is usually free of charge for the buyer (as it’s the seller who pays them their commission, typically 5%).

If you decide to go with a less well-known agency, it’s important to check it has a proper license, and that your agent is registered. You can check the agent’s registration using the IMPIC website.

The agency should have a license number from the Portuguese Association of Real Estate Agents (Associacao de Mediadores Imobiliarios).

You can also look for real estate opportunities directly from the owners. Facebook Marketplace can be a good place to start off with. You can also post requests on various regional Facebook or WhatsApp groups.

Buying privately can give you more negotiating power, as the seller won’t have to pay the typical 5% commission to a real estate agent.

If you decide to go down the private sale route, make sure you seek advice from a reliable lawyer, and if necessary a surveyor.

Real Estate Taxes in Portugal

Here’s an overview of the various taxes you’ll need to pay when buying property in Portugal.

There are three main taxes for property: the municipal property tax (IMI), the municipal real estate transfer tax (IMT), and stamp duty (IS). 

In the section we’ll examine these taxes one by one.

Property Transfer Tax (IMT) 

This tax is imposed on the real estate transaction itself, every time a property is purchased in Portugal.

IMT (Imposto Municipal sober as Transmissões Onerosas de Imóveis) is calculated either on the tax value of the property or the value declared in the deed of sale, whichever is higher.  

IMT is payable before buying a property. Three key factors are involved in calculating it:

  • Type of property, either rural or urban 
  • Location of the property, either mainland Portugal or the autonomous regions (like Madeira) 
  • Purpose of the property, either main residence or secondary 

Stamp Duty 

This tax is imposed on the purchase and sale of property. As a buyer, you’ll pay stamp duty at the time of signing the deed.

Stamp duty for both purchase and sale is 0.8% of the total property value. 

Municipal Real Estate Tax (IMI)

There’s one more property related tax to be aware of, but unlike the other two, it’s not payable at the moment of purchase.

It’s called IMI (Imposto Municipal sobre Imóveis). IMI is calculated on the value of the property, and must be paid every year starting from the moment you acquire the property. It’s the equivalent of council tax in the UK. 

IMI levels vary according to whether the property is classed as urban or rural. For urban properties, IMI ranges from 0.3 to 0.5, and for rural properties it’s 0.8 %. 

Pitfalls of Buying Property in Portugal

#1. Legal issues

The legal side is a major potential pitfall of buying Portugal real estate. There are several key factors to keep in mind.

Subrogation law

First is Portugal’s subrogation law. This law means that any debts are attached to the property instead of to the original borrower as an individual.

Unfortunately, if you’re not careful, you might end up liable for large amounts of unpaid debts, including property taxes, utility bills, or other personal debts that the previous owner secured against the property.

The best way to avoid this is by hiring a reliable local lawyer to check the registered title (Certidão de Teor) to make sure the property is free of any outstanding debts before you sign the deed.

Dispersion of ownership

Another potential legal pitfall is the law governing dispersion of ownership.

Under Portuguese law, all family members have a stake in any inherited property.

So any distant cousins living on the other side of the world may own a portion of the property. They have the right to stop the sale, which can cause huge delays.

You should work with a lawyer who can check the ownership records and let you know about any potential difficulties.

Don’t be put off by these potential legal pitfalls of buying Portugal real estate. A good local lawyer should be able to guide you through them.

Title deeds

This is mainly an issue for older and rural properties.

You must make sure the property’s title deeds correctly reflect what you’ve actually purchased.

Properties, especially rural ones, sometimes consist of several smaller areas, which could have been subdivided even further in the past. Hence, it can be difficult to find out exactly what you’re buying.

And don’t expect much help from your real estate agent – instead, this is a task for a lawyer with extensive local knowledge.

What’s more, you might find your dream rural property doesn’t have an administrative record, which can lead to problems later down the line.

You’ll need to ask your lawyer to go over the deed and legalize any existing parts of the property that don’t already have planning permission.

#2. Structural quality

Another of the potential pitfalls of buying Portugal real estate is the structural quality of some buildings.

Properties over five years old aren’t covered by a warranty for any defects to the structure.

But if you’re buying a brand-new property, then this shouldn’t be an issue, as the warranty will cover you for problems like these.

Nevertheless, we highly recommend checking which company built the property you’re interested in and asking around locally about their reputation.

Major companies need to maintain their good reputations, so they’re unlikely to take shortcuts.

If you’re buying a second-hand property, then it’s highly recommended to conduct a structural survey before purchase.

Common problems include leaking or rusty pipes, humidity issues, poor quality wiring, and cracked walls.

#3. Tax implications

Finally, another pitfall when buying real estate in Portugal is the potential tax implications.

It’s important to understand these fully before signing the deed on your dream property.

I recommend arranging a consultation with a local tax advisor to get a clear picture of your tax liabilities.

If you decide to live full-time in Portugal, you’ll also become tax resident.

That means you’ll be liable for Portuguese taxation on your worldwide income. You’ll need to make an annual tax declaration to the Portuguese tax authority.

But, if you’ve never lived in Portugal before, you can apply for NHR (‘non-habitual resident’) tax status, which gives you preferential tax treatment on certain kinds of income (mainly from abroad) for a period of 10 years.

How Portugal taxes your overseas income also depends on the double taxation treaty between Portugal and the country where those funds originate. Again, please consult a tax advisor for specific advice.

You may decide to buy real estate for investment, but continue living outside Portugal.

In that case, you should also understand your situation in terms of capital gains tax when you finally sell in future, along with tax on any rental income that you earn from the property.

Lastly, you’ll also need to keep in mind the Portuguese property taxes on your purchase, including IMT (transfer tax), IMI (annual municipality tax), and stamp duty.

Buying Portugal Real Estate: The Process

Here are the basic steps for buying Portugal real estate:

  1. Get your NIF. Having a Portuguese tax number is essential for buying real estate, even if you don’t live in Portugal. Don’t worry, just having the tax number won’t make you a tax resident.
  2. Decide on the property you’d like to buy, and make the seller an offer. In Portugal, it’s normal and expected to negotiate – so don’t forget to do so.
  3. If you need a mortgage, decide which bank offers the best options, with the help of a Portuguese mortgage advisor.
  4. Once the price is agreed with the seller, the next step is to sign a promissory contract (Contrato de Promessa de Compra e Venda or CPCV), and pay a deposit, normally 10%. The CPCV protects both you and the seller if one of you decides to back out. NB, if you’re using a mortgage, make sure the promissory contract includes a clause to refund your deposit in the event the bank refuses the mortgage.
  5. After that, you can sign the deed, which must be witnessed by a notary.

Need a mortgage for your dream property? Check out our full guide to mortgages in Portugal

Documents needed to buy property in Portugal

  • NIF
  • Photo ID from both the buyer and the seller
  • Contrato-Promessa De Compra e Venda (CPCV), if available.
  • Property’s energy certificate.
  • Imposto de Selo (payment of the stamp duty)
  • Caderneta Predial (land register)

Portugal Real Estate and the Golden Visa

Buying real estate in Portugal can be a convenient route to securing residency.

Portugal offers a real estate route as part of its Golden Visa program.

At the start of 2022, the Portuguese government introduced some major changes affecting the Golden Visa real estate route.

Most importantly, Lisbon, Porto, and some areas of the Algarve are no longer eligible for Golden Visa investment.

The goal of this change is to redirect Golden Visa capital into under-invested regions of the country.

You can still use your real estate purchase to get the Golden Visa in central areas of Portugal, along with the Azores and Madeira.

If you want all the benefits of Golden Visa residency, without the regional restrictions, then the investment funds Golden Visa route is worth looking at.

Once you become resident with this route, you can live anywhere in Portugal, including Lisbon, Porto, and the Algarve.

For more information on the Golden Visa, here’s our detailed Portugal Golden Visa 2022 Guide.

FAQs: Portugal Real Estate

How much deposit do I need to buy a house in Portugal?

You’ll typically need a 20-30% deposit to get a mortgage for buying a house in Portugal, depending on the bank. If you’re already resident in Portugal, some banks will offer 90%, reducing your deposit to 10%.

Can I buy a property with crypto in Portugal?

Yes, it’s possible to buy a property with crypto in Portugal. This is a recent development as of May 2022, when Portugal introduced the option of cryptocurrency payments.

Can foreigners buy property in Portugal?

Yes, foreigners can buy property in Portugal without any restrictions.

Why buy property in Portugal?

Portugal is becoming an increasingly popular destination for many reasons. Firstly, it has an excellent climate and high levels of safety and security. What’s more, it offers high quality of life with a reasonable cost of living. Also, buying property in Portugal can be a way to secure residency using the Golden Visa program, which can act as a pathway to citizenship after five years.

Conclusion

With its temperate climate, stunning coastal views, and relaxed way of life, it’s no wonder Portugal is becoming more and more popular with remote workers, families and retirees from all over the world.

If you’re looking for a place to buy real estate in 2022, Portugal should be at the top of your list.

Buying real estate in Portugal is also an excellent way to get residency using the Golden Visa program, which can lead to citizenship after five years.

But be aware – there are several pitfalls when buying property in Portugal. Make sure you do intensive research and get professional advice before making any decisions.

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