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  • Writer's pictureAlejandra Bernard

Portugal's Property Market: A Shift in Foreign Buyers

Portugal's property market has been a hotspot for foreign investment in recent years. However, new data from the National Statistics Institute (INE) reveals some interesting trends. While overall purchases are down, there's a fascinating shift in who's buying.

Villa in Portugal for the blog Portugal's Property Market: A Shift in Foreign Buyers by Benjamin Seide, CEO of Lagos Homes in the Algarve, the trusted German estate agent for property buyers

Portuguese Residents Buying Less

The data shows a 19.8% decrease in home purchases by Portuguese residents in 2023 compared to 2022. This translates to a larger share of the market (87.3%) being occupied by domestic transactions. This could be due to several factors:

  • Rising Prices: Portugal's property boom has seen prices soar, particularly in popular areas. This could be pushing some Portuguese buyers out of the market, especially first-time buyers.

  • Increased Interest Rates: Rising interest rates might make mortgages more expensive, further reducing affordability for domestic buyers.

  • Economic Uncertainty: Global economic uncertainty could also be causing some Portuguese residents to hold off on major purchases like property.

Foreign Buyers: A Mixed Picture

The story with foreign buyers is more nuanced. Overall foreign purchases dipped by 3.1%, with a 13.5% decrease in acquisitions from EU residents. This suggests a potential cooling off from some European investors, possibly due to:

  • Changes in Government Incentives: Portugal has recently tweaked its Golden Visa program, which grants residency permits in exchange for property investment. These changes might make the program less attractive to some EU investors.

  • EU Market Saturation: Some EU investors might be looking for new investment opportunities outside of Portugal after a period of strong growth in the market.

However, the trend isn't universal. The number of property purchases by buyers outside the EU actually grew by 9.3%. This indicates that Portugal remains an attractive destination for investors from other parts of the world, potentially due to:

  • Relative Affordability: Compared to other European countries, Portugal's property market remains relatively affordable, especially for luxury properties.

  • Lifestyle Appeal: Portugal's sunny climate, relaxed lifestyle, and growing startup scene continue to attract international investors seeking a second home or investment opportunity.

Looking Ahead - Portugal's Property Market

Portugal's property market remains dynamic. While domestic purchases are taking a larger slice of the pie, foreign investment, particularly from non-EU countries, shows signs of resilience. This trend is worth monitoring to see how it impacts:

  • Prices: Will a decrease in EU investment and increased domestic purchases lead to a price correction? Or will continued demand from non-EU investors keep prices buoyant?

  • Availability: If domestic purchases rise, will there be enough available properties to meet demand, particularly in popular areas?

  • Overall Market Landscape: How will the changing buyer demographics impact the overall market dynamic, including rental prices and investment opportunities?

By keeping an eye on these factors, we can gain a better understanding of the evolving landscape of Portugal's property market.

Lagos Homes is your reliable partner for all your real estate needs in Portugal. We go beyond helping you find your dream property, offering expert guidance across all aspects. Do you have any inquiries? Feel free to contact us now!

Dona Ana panoramic beach view describing the Portugal's Property Market: A Shift in Foreign Buyers offered by the independent real estate buyer's agent Lagos Homes in the Algarve Portugal


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