An introduction to buying property in Portugal


After deciding to buy a home in Portugal, your first tasks will be to choose the region and what sort of home to buy.

If you’re unsure where and what to buy, the best decision is usually to rent for a period. The secret of successfully buying a home in Portugal (or anywhere else for that matter) is research, research and more research, preferably before you even set foot there.

You may be fortunate and buy the first property you see without doing any homework and live happily ever after. However, a successful purchase is much more likely if you thoroughly investigate the towns and communities in your chosen area; compare the range and prices of properties available and their relative values; and study the procedure for buying property. It’s a wise or lucky person who gets his choice absolutely right first time, but there’s a much better chance if you do your homework thoroughly.

One of the things which attracts many buyers to Portugal is the generally high quality of property compared with some other European countries, which usually provides good value for money. However, although more Portuguese own their own homes than people in some other European Union (EU) countries, the Portuguese don’t normally buy property as an investment and you shouldn’t expect to make a quick profit when buying property in Portugal.

Property values usually increase at an average of around 5 per cent (if you’re lucky) a year or in line with inflation, meaning that you must own a house for around three years simply to recover the fees associated with buying. Property prices rise faster than average in some fashionable areas, although this is generally reflected in higher purchase prices.

The stable property market in Portugal acts as a discouragement to speculators wishing to make a quick profit, and capital gains tax can also take a large slice out of any profit made on the sale of a second home.

Like many other countries, the Portuguese property market was hard hit by the recession in the early 1990s during which it experienced a severe slump, particularly on the Algarve. By the mid-1990s the market started to recover and now (2002) there’s a strong property market throughout the country, particularly in properties on luxury developments (offering a wide range of leisure and sports facilities) and luxury villas.

In the 1970s and 1980s, over-development (when a rash of ugly high-rise buildings were constructed) spoilt some areas of the Algarve and there are now strict planning controls (among the strictest in Europe). A new planning law, (Plano Regional de Ordenamento do Território Algarve/PROTAL) introduced in 1993 to curb uncontrolled development, has stabilised and increased prices and most new developments are now low-density buildings in harmony with their surroundings.

There are many foreign property owners in Portugal, which is one of Europe’s favourite countries for second homes, particularly among buyers from Britain, Germany, Ireland and Scandinavia. Most foreigners are concentrated on the Algarve coast, although buyers are now venturing further afield and investigating other regions, including both coastal and rural areas.

Many foreign property owners in Portugal are residents (some 50,000 Britons live there), the majority of whom are retired. A slice of the good life needn’t cost the earth, with ‘old’ apartments and village homes available from as little as €50,000, modern apartments from around €75,000 and detached villas from €125,000. However, if you’re seeking a substantial home with a sizeable plot of land and a swimming pool, you will usually need to spend at least €250,000 (depending on the area –considerably more in the Algarve). For those with the financial resources the sky’s the limit, with luxury villas costing well over a million euros.

Further reading

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