Portugal has wide appeal. It offers bustling cities, vibrant towns and peaceful rural villages. It has an amazing coastline, great weather and there are no restrictions on buying property. There are lot of great golf courses and the locals are very friendly. It’s an easy place to get to with frequent flights to and from the UK, with many flights under three hours.
House Prices in Portugal have been changeable over the last 10 years. Between Q4 2008 and Q1 2017, property prices have slipped by just under 3% from their pre-crash figures. With that said, property prices are on the increase and today’s prices are nearly 9% higher than they were in 2014.
Prices in Portugal have grown consistently for the last 3 years.The rate at which prices are growing is also accelerating. The first quarter of 2017 saw the fastest quarterly growth for 10 years and prices have now nearly recovered to pre-crash levels. The indicators are positive for Portugal and suggest prices will continue growing. 2018 is perhaps a window for buyers to take advantage of growing trends.
Here are some key facts:
- House prices Up 3.26% in 2017
- FDI Growth thanks to new wealth tax introduced last year, FDI 29th Globally
- Economy One of Europe’s strongest growing economies, 2.5% increase 2017
- Interest rates Historic Lows 1.57%
- Lending Strong and increasing in line with the economy.
- Regular flights Yes
- Open all year round Yes
- Ex-Pat communities Yes
- Attractions Beautiful coast line and great all year-round weather
- Climate On average 300 days a year of sunshine.
- Primary languages Portuguese
- Purchase costs Low to Moderate range from 5.69% to 20.15%
- Taxes Moderate to high
Why Buy in Portugal?
The Portuguese economy is one of the strongest growing in Europe. There has been robust demand and a lack of supply in the Portuguese market over the last year which has pushed house and rental prices up substantially.
House prices grew by 3.26% at the national level in 2017 and it’s expected that there will be an average increase of 6% over the next 5 years.
Rental growth is expected to follow house prices, with Lisbon having yields of between 5.4% and 6.2%. There has been new lending activity and low interest rates, which is growing property prices and rents back to the heights of early 2010.
Holiday Homes/ Lifestyle
The key hotspot for Brits in Portugal is the Algarve. The most Southern point of Portugal, the Algarve has average highs of 24 degrees in July and average lows of 12 degrees in January; a far cry from the Great British weather forecast. Year-round Sun, the relaxed atmosphere and plenty of Golf makes the Algarve very popular for British Buyers and Holiday Renters alike.
Vilamoura is a popular holiday destination and is just 30mins from the nearest airport. Whilst pricey it offers some of the best quality facilities and attractions meaning visits to your holiday home will never be boring. Lagos in Western Algarve is approximately 1 hour from Faro airport and can offer holiday-home buyers Sun, fun and value for money. Most areas of the Algarve are easily served by Faro airport meaning, with regular flights from all major UK air terminals, you could be enjoying the Portuguese Sun within hours of leaving work.
Apartments are an excellent “lock-up-and-leave” opportunity and can be found in most developments in the Algarve region. Those developments with communal swimming pools offer an excellent balance between quality facilities and low cost maintenance. The popularity of the apartments in the Algarve mean there are promising prospects of securing an income from your holiday home however do be aware that summers are peak season and such apartment complexes may become over crowded.
Portugal’s lure of sun, sea, sand and golf is attractive to many British buying abroad. Whilst the Brexit process is not yet complete, Brits are governed by the same residency laws as EU nationals. A Visa is not required to stay in Portugal and there is no time limit however you may be required to register your residency documents locally. The Portuguese Immigration service can assist you in understanding your requirements when moving to Portugal, particularly in light of Brexit.
Whilst there may be no limit on visa-less stays in Portugal for EU nationals, non-EU citizens are limited to 90 days after which a visa is required. Temporary residence documents are valid for one year. Once temporary residence has been held for 5 years (consecutively), a permanent residency permit can be applied-for. Portugal requires all those applying for residency to be able to prove that they can support themselves financially and that they have the appropriate medical cover. Anyone staying in Portugal for 183 consecutive days or more you can become eligible for taxation by the authorities.
The investment environment in Portugal is seen by many investors as promising. Tourism from Britain is on the increase in Portugal creating demand for self-catering holiday lets. The Algarve was voted Europe’s Best Beach Destination in 2017.
Property prices in Portugal remain low however they have begun to rise over the last 3 years, doing so consistently and there is evidence to suggest prices will continue to go in the same direction.
Portugal has a favourable tax regimes which includes no inheritance tax and no wealth tax. It is worth discussing your potential tax position in Portugal with an international tax advisor or accountant who has knowledge of the Portuguese tax laws before making any financial commitment.
Strict planning laws are in place to ensure no new developments compromise the charm and appeal of Portugal. Development is capped in many areas however the government are investing heavily in improving the country’s infrastructure. This means that existing properties will become even more attractive and are protected from becoming “old hat”.
Portugal has Europe’s most attractive Golden Visa Scheme. A Portuguese passport can be granted to those investing €500,000 in property or just €350,000 in property that requires renovation. Golden Visas can be granted without the need to reside in Portugal however the government may ask the applicant to prove your ties to the country and pass a basic language test. A Golden Visa for an investor also grants residency to immediate family members.
Those qualifying for residency for 6 years can also apply for citizenship without the need for investment. Citizenship is renewed every 2 years and requires those applying to be in Portugal for 2 weeks during that period.