How does Portugal’s Real Estate Market Perform?

Updated: 19 December 2022

Property investors who make plans about buying property in Portugal have to have some facts about the current market. The data involved in the report allows investors and professionals to adjust their purchases, sales, and other activities accordingly.

The Resorts Price Index Increased 18% in 2018

According to the Resort Price Index, the second half of 2018 confirmed the price recovery, which increased 18% year-over-year after a biannual increase of 8%. However, contrary to the markets with more consistent and longer rising trajectory of Lisbon and Porto, Portugal resorts have shown a more fluctuating behaviour. Despite reaching an 18% year-over-year growth, the market experienced a 10% drop during the second semester of 2017. Thus, it is now increasing 6% over the period before the Brexit referendum.

British Buyers Started to Hesitate

In terms of price perspectives, Portugal real estate market shows that British buyers are still there. However, performance is not the same. Two previous reports of Resorts Market Survey have shown a 7.2% increase each. Yet for the on-going year, the expectation is an increase of 5.5%. As indicated in these numbers, the sales prospects are still positive. On the other hand, they are quite weakened compared to previous years’ reports. Two previous semesters presented sentiment indicators of 70 and 52 points. This particular indicator was close to 40 points for the year of 2018. Brexit’s cloud of uncertainty plays a big role in British buyers’ decision-making process. Put together with the numbers of sentiment indicators, it can be deduced that the uncertainty caused by Brexit results in a further delay in British buyers’ decision making.

Luxury Albufeira-Loulé Houses are Getting Pricier

According to SIR-Resorts, Albufeira-Loulé is still the most popular area of offer. In 2018’s real estate sales, this axis had a 46% share. The average asking price in 2018 in Albufeira-Loulé was 4.493 euro/sqm which surpasses other high end markets like Sotavento. Albufeira-Loulé remains the most important axis in terms of an offer within residential tourism, according to SIR-Resorts. This area concentrated 46% of the units on sale in 2018, constituting one of the areas where the number of houses integrated into resorts assumes a greater expression. The highest range in this axis is at 8.612 euro/sqm, reaching 8.848 euro/sqm in the units integrated within resorts. Moreover, according to SIR-Resorts’ reports for 2018 financial year, property prices in Albufeira-Loulé increased greatly. High end houses with 5 bedrooms have reached an asking price of 7.2 million euros.

Albufeira, Loulé and Tavira Experience the Most Increase in Prices

According to Ci’s Housing Prices Index (IPR), real estate sales prices in Algarve increased 13% in the 3rd quarter of 2018 year-over-year. Albufeira, Loulé and Tavira registered the most intense year-over-year variations (17%, 16,1% and 15,1%, respectively) in the region. However, among these three regions, only Loulé registered acceleration in increase over the previous quarter (13.1%). In Albufeira, there was a slowdown in terms of pace (0.3%), and in Tavira the decrease was almost 2 per cent. Portimão, which is the most dynamic selling market in the region (17% of the whole for the quarter), registered a year-over-year increase of 11.6%. Faro (11.8%), Silves (7%) and Lagos (5.3%) are the other three markets whose prices increased below the regional average. The remaining markets presented year-over-year increases of around 14.5%.

Algarve Pipeline Continues to Grow Impressively

The Algarve registered one of the largest growths in terms of housing pipeline between 2017 and 2018. Last year, 3.441 new dwellings were launched in the region, 38% more than the 2.491 which entered in pipeline in the previous year. This rate has only been surpassed by the country’s main target for investors: Lisbon’s Metropolitan Area. This area had a 43% increase in dwellings last year entered in the pipeline. According to the data of Pipeline Imobiliário which receives its information from the energy pre-certificates issued by ADENE (Portuguese Energy Agency); for two years, Algarve had 5.932 houses under licensing.

In the Algarve, the 2018 pipeline corresponds to more than 415.000 sqm of construction, spread out through 1.208 housing projects (79% new construction and 21% rehabilitation). Of these, 88% are uni-family houses. The other remaining part of 12% concerns apartment buildings. In terms of dwellings, this last typology dominated, concentrating 66% of the units under licensing in the Algarve in 2018.

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