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Real Estate Market Prospects In Portugal In 2024

The removal of property investment as an option when applying for a Golden Visa in Portugal and the closure of the Non Habitual Residence scheme is due to the Government’s belief that these have been driving unsustainable property price increases.  So what are the real estate market prospects in Portugal in 2024?

Bloomberg report that home prices in Portugal have started to slow in recent quarters and that they have likely peaked as higher interest rates cools demand.  The quote DBRS Morningstar saying that “Prices are not in a bubble but likely reaching a ceiling,”  The DBRS study cited foreign demand, historically low levels of new construction and higher building costs among the factors affecting the country’s residential market.

DBRS said the recent changes to government programs “could result in reduced foreign demand for Portuguese properties,” but won’t completely dampen the country’s appeal”.  The governor of the Bank of Portugal does not agree that the Golden Visa and NHR schemes have been the main cause of increased property prices over recent years.

Portugal remains a relatively affordable compared to other European countries and “this makes it an attractive destination for house purchase, be it for own-occupancy or as an investment,” the credit rating agency said.

Mortgage Direct report that Portugal’s real estate market has become attractive to global investors in recent years, given its stability and potential growth. Lisbon, Porto or the Algarve region are particularly popular and have experienced an increase in property values making them attractive to international buyers looking for profitable investments.

They say that the Portuguese real estate market has shown excellent performance despite global economic challenges.  The residential market has experienced all-time highs in property sales and values.

They believe that the Portuguese real estate market will reach an estimated sales volume of 30,000 to 31,000 million euros with around 168,000 properties sold. This increase in sales reflects the strong demand from local and international investors.

Mortgage Direct advise that Portugal offers historically low mortgage credit interest rates, making property purchases more accessible to investors. The recent introduction of direct flights from the United States to Faro Airport is likely to enhance American investment and tourism in the Algarve.

Portugal’s property market in 2024 is seeing contrasting trends. Popular areas, particularly the Algarve and Lisbon, are still seeing growth in property values, driven principally by international investment, urban regeneration and a scarcity of new developments. This contrasts with predictions of modest slowdown in other areas.

Recent years have seen a significant increase in US investment in Portugal, indicating Portugal’s growing status as a prime location for international real estate investment.

The Portuguese real estate market offers many investment opportunities, including residential, commercial and luxury properties. Luxury residential sectors in the Algarve and Porto have gained popularity among high-net-worth individuals.

Mortgage Direct believe that the market is experiencing a demographic shift of buyers and see growing interest from young investors and digital nomads who are attracted by the country’s lifestyle, climate and digital infrastructure.

Portugal with rental yields ranging from 4.2% to 6.9% presents unique opportunities in the rental market, especially in urban centres where demand for short and long-term rentals remains high. This is partly due to the country’s growing popularity as a tourist destination and its appeal to expats and remote workers.

The Portuguese economy has shown strong growth. The IMF forecasts 1.7% growth in 2024 and the economy is expected to grow by 7.9% over the next five years.  This is driven by the post-pandemic recovery in tourism and increased service exports, which have had a positive impact on the real estate market. However, challenges such as global supply chain disruptions and energy market fluctuations have impacted economic stability and growth prospects.

Portugal is anattractive destination for those looking for a real estate investment opportunity. There is a wide range of properties available, investment conditions are favourable and the market continues to grow.  Portugal’s lifestyle and culture add to the attraction of investing in real estate.