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Portugal’s residential markets reached a historic 26 billion euros in 2018

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    September 28, 2019

    Investment in Portugal’s residential markets reached a historic 26 billion euros in 2018 and grew by 19 percent in the first nine months of the year, according to the Instituto Nacional de Estatística (Statistics Portugal). As well as the growth in overseas property investment, domestic sales also increased, with many locals choosing to upsize their homes or relocate to cosmopolitan cities in light of the improving economic situation.

    House prices in Portugal have risen sharply over the last few years, growing by eight percent overall in 2018 according to INE as demand for housing increasingly outpaced supply. Capital Lisbon experienced more remarkable growth of 23 percent, with house prices still being cheaper on average than in other European capitals at €10,000 per square meter, compared to €29,500 in London, €17,000 in Paris and €14,000 in Madrid.

    The Portugal property market remains buoyant despite some changing demographics among those buying homes in the country. Portugal is increasingly popular with buyers from across the globe, not least those from colder northern Europe. In addition to buyers from the UK, Portugal is now a top choice for overseas buyers from Scandinavia, France and Germany.

    Last year, foreigners were responsible for the purchase of 8.2% of total property sold in Portugal, paying an average of over €171,000 for each property, 58% more than the average value of real estate transactions in the country (around €108,000).

    According to data released by the INE (Statistics Portugal), 242,000 properties were sold in Portugal last year, for a total transaction value that exceeded 26 billion euros. Nearly 20,000 of these properties were purchased by non-residents, for a total value of 3.4 billion euros, equivalent to 8.2% of total properties traded and 13% of total sales in that period.

    The French were the ones who bought the most properties in the country (19.7% of the total foreign buyers), followed by residents of the United Kingdom (16.9%), and then the Brazilians (8.3%). However, the highest average value (297.200 euros) of properties sold was to the Chinese, which were likely to spend almost twice as much as a Portuguese buyer. In practice, citizens residing in China accounted for only 5.1% of real estate transactions of foreigners, but were the ones that invested the most in per capita terms.

    Non-Habitual Resident and Golden Visa

    Portugal’s Golden Visa scheme continues to attract new arrivals from much further afield. The Golden Visa scheme offers fast-track residency to overseas buyers prepared to invest in the country.

    The scheme is especially popular with those from Russia, China and South Africa. People can qualify for the scheme with a property investment of around €500,000. There’s a lower threshold (€350,000) for buying property in areas considered to be undergoing regeneration.

    In addition to this, Portugal’s Non-Habitual Resident scheme is anther string to the country’s bow. It’s undoubtedly another reason why Portugal continues to attract property investment from overseas. This tax scheme, aimed primarily at pensioners and high net worth individuals, provides low fixed tax rates for local income. There are also total (time-limited) exemptions on money sourced from abroad. In some cases this can mean people can move to Portugal and enjoy tax-free pension income.

    Portugal also has an extremely favourable inheritance tax regime. Inheritance tax has been replaced with stamp duty in Portugal. It is only payable on Portuguese assets, and there are exemptions for direct descendants. Used together, these schemes make Portugal an extremely attractive and cost-effective destination for permanent living.