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International Real Estate Report Ranks Portugal as Top Relocation and Investment Choice for Luxury Property.
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This latest independent international research from Property Market-Index highlights why Portugal, particularly the Algarve and Lisbon and surrounding areas as well as Porto, are the hottest destination for high-net-worth individuals seeking a blend of lifestyle, investment opportunities, and unparalleled quality of life compared with the rest of Europe, the UK and North America in particular.
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Portugal's luxury property market is experiencing continued growth, with top-tier locations such as the Algarve, Lisbon, and the Silver Coast, along with Porto, leading the charge.
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Senior researcher and spokesperson for Property Market-Index, Amanda Collison, emphasises the Algarve's booming market: "The Algarve's luxury real estate market is thriving. The continued influx of entrepreneurs and wealthy families choosing the Algarve is delivering for investors, with quality build programs now on par with international standards.
"The demand from wealthy buyers is creating a supply shortage at the top-end of the market, driving consistent capital growth, and Lisbon and surrounding areas are showing a similar pattern to the Algarve.
“We are seeing double the growth in value compared to the UK, EU, and North America in terms of property prices. We see this continuing for at least the next three years due to international demand over supply in the luxury end, and the new government's housing policy for local people and first-time buyers will take a few years to impact that side of the market."
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The report identifies leading property hotspots that are attracting the most interest from international buyers, including Quinta do Lago, Vale do Lobo, Ferragudo/Carvoeiro, Lagos, Estoril, Comporta, Lisbon districts (Liberdade, Lapa, and Principe Real), Cascais, Silver Coast, Sintra, Foz do Douro, and Vilamoura.
These areas are recognised for their regeneration, investment in luxury real estate, quality of new homes specifications, growth, cultural richness, and investment potential, as well as lifestyle, making them prime choices for those looking to relocate.
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Portugal's attractive tax regimes are a significant draw for wealthy expats, even with the changes that will come in early 2025 for new entrants. The Non-Habitual Residency (NHR) tax incentives offered substantial tax savings on non-Portugal-derived passive income for ten years, and over 75,000 international expats had taken advantage of this since 2009, when it was introduced.
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Even with the transition to the new NHR 2.0 tax regime in 2025, Portugal will continue to attract high-net-worth individuals with the right professional qualifications to qualify for the new scheme. This is also driving inward investment and entrepreneurs, bringing new talent and innovation to Portugal.​
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Credits: Supplied Image; Author: Brookes Property Group
Property prices in Portugal started to recover in 2014 and have been rising since.
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Portugal's house prices continue to increase, despite falling demand and a rapidly slowing economy. During the year to April 2024, the median price of dwellings in Portugal rose by 7.04% to €1,596 (US$1,732) per square meter (sq. m), according to data released by the Instituto Nacional de Estatistica (INE). Dwelling prices have been continuously rising strongly in the past several years - increasing by about 9.2% annually from 2017 to 2023.
However, when adjusted for inflation, nationwide dwelling prices have increased by a more modest 4.74% y-o-y in April 2024.
House prices rose by 4.9% in 2015, 5.7% in 2016, 7% in 2017, 9.7% in 2018, 11.7% in 2019, 6% in 2020, 11.2% in 2021, and 13.5% in 2022. In 2023, house prices continued to increase, albeit at a slower pace of 5.4%.
In Grande Lisboa, property prices were up by 4.9% (2.6% in real terms) in April 2024 from a year earlier, to a median price of €2,333 (US$2,532) per sq. m.
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By region:
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In the North, the median property price rose by 9.1% y-o-y in April 2024 (6.7% in real terms), to €1,371 (US$1,488) per sq. m.
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In the Center, property prices were up strongly by 11% y-o-y in April 2024 (8.6% in real terms), to €1,084 (US$1,177) per sq. m.
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Oeste e Vale do Tejo saw a house price growth of 12.4% (10% in real terms) y-o-y to €1,211 (US$1,314) per sq. m.
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In Península de Setúbal, residential property prices rose by 6% (3.7% in real terms) y-o-y to €1,818 (US$1,973) per sq. m.
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In Alentejo, property prices rose strongly by 13.4% (10.9% in real terms) y-o-y to €1,120 (US$1,216) per sq. m.
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In Algarve, the average property price rose by a meager 1.3% y-o-y (and actually dropped by 0.9% in real terms) to €2,110 (US$2,290) per sq. m. in April 2024.
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Azores Islands registered the biggest property price growth of 19.7% (17.1% in real terms) y-o-y to €1,269 (US$1,377) per sq. m.
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In Madeira, the median property price also increased by a huge 16.8% (14.3% in real terms) y-o-y to €1,796 (US$1,949) per sq. m. in April 2024.
By property type, apartment prices rose by 6.1% y-o-y to €1,769 (US$1,920) per sq. m. in April 2024 while house prices increased by 9.8% to €1,248 (US$1,355) per sq. m.
The continued rise in house prices is surprising given the sharp decline in property demand. During 2023, the total number of housing transactions in Portugal fell sharply by 18.7% to 136,499 units from a year earlier, following y-o-y increases of 1.3% in 2022 and 20.5% in 2021, according to INE figures. All regions registered a decline in housing transactions.
The residential construction sector remains robust. During 2023, licensed dwellings increased further by 6% y-o-y to 32,053 units, according to INE figures. Likewise, dwelling completions also rose by 6.8% y-o-y to 21,534 units in 2023.
Portugal's economic growth slowed sharply to 2.3% in 2023 from a year earlier, according to the country's statistical agency, following strong expansions of 6.8% in 2022 and 5.7% in 2021, signaling a broad-based slowdown in activity across major sectors. Then in Q1 2024, the Portuguese economy grew by a meager 1.4% from a year earlier - its worst showing since Q1 2021. This was mainly due to a slowdown in private spending and investment.
The economy is expected to slow further this year, with a projected real GDP growth rate of just 1.7% this year, before improving slightly to a 1.9% growth in 2025, based on the European Commission forecast. On the other hand, the Banco de Portugal expects the economy to expand by 1.2% in 2024 and by 2.1% next year.
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Lalaine C. Delmendo May 27, 2024
Construction activity continued to increase through the end of 2023
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After a long slump in construction, the number of licensed new constructions rose by 21.8% y-o-y in 2015 to 8,491 units, by 36.1% to 11,558 units in 2016, by 29.3% to 14,946 units in 2017, by 44.4% to 21,587 units in 2018 and by another 15.4% y-o-y to 24,905 units in 2019.
The growth in residential construction activity slowed in 2020 due to the adverse impact of the pandemic, with licenses rising by just 5.07% y-o-y to 26,168 units. Activity improved again in 2021, with the number of licensed new constructions increasing by 12% to 29,312 units. Then in 2022, licensed dwellings rose by a modest 3.2% y-o-y to 30,247 units - the first time that it crossed the 30K mark in 14 years.
During 2023, licensed dwellings increased further by 6% y-o-y to 32,053 units, according to INE figures.
Dwelling completions have followed a similar pattern, rising continuously from 2016 to 2021, registering an average growth of 19.2% annually. Completions continued to increase in recent years, albeit at a much slower pace - by 3% y-o-y to 20,156 units in 2022 and by 6.8% y-o-y to 21,534 units in 2023.
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Lalaine C. Delmendo May 27, 2024
2024 Statistics
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​ Price to Rent Ratio in Portugal decreased to 168.56 in the first quarter of 2024 from 171.93 in the fourth quarter of 2023. Price to Rent Ratio in Portugal averaged 133.03 from 1988 until 2024, reaching an all time high of 171.93 in the fourth quarter of 2023 and a record low of 97.40 in the second quarter of 2013.
New Home Sales in Portugal decreased to 6712 dwellings in the fourth quarter of 2023 from 7612 dwellings in the third quarter of 2023. New Home Sales in Portugal averaged 6494.67 dwellings from 2009 until 2023, reaching an all time high of 11432.00 dwellings in the first quarter of 2010 and a record low of 3693.00 dwellings in the first quarter of 2013.
source: Statistics Portugal
Home Ownership Rate in Portugal decreased to 76 percent in 2023 from 77.80 percent in 2022. Home Ownership Rate in Portugal averaged 75.19 percent from 2004 until 2023, reaching an all time high of 78.30 percent in 2021 and a record low of 73.90 percent in 2019.
source: EUROSTAT
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Housing Index in Portugal increased to 211.27 points in the fourth quarter of 2023 from 208.48 points in the third quarter of 2023. Housing Index in Portugal averaged 127.68 points from 2009 until 2023, reaching an all time high of 211.27 points in the fourth quarter of 2023 and a record low of 92.25 points in the second quarter of 2013.
source: Statistics Portugal
Bank Lending Rate in Portugal decreased to 5.66 percent in June from 5.77 percent in May of 2024. Bank Lending Rate in Portugal averaged 5.01 percent from 2003 until 2024, reaching an all time high of 8.08 percent in October of 2008 and a record low of 1.63 percent in May of 2020.
source: European Central Bank
The Corporate Tax Rate in Portugal stands at 21 percent. Corporate Tax Rate in Portugal averaged 33.43 percent from 1981 until 2024, reaching an all time high of 55.10 percent in 1983 and a record low of 21.00 percent in 2015.
source: Autoridade Tributária e Aduaneira
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The Personal Income Tax Rate in Portugal stands at 48 percent. Personal Income Tax Rate in Portugal averaged 44.10 percent from 1995 until 2024, reaching an all time high of 48.00 percent in 2013 and a record low of 40.00 percent in 1996.
source: Autoridade Tributária e Aduaneira
The Sales Tax Rate in Portugal stands at 23 percent. Sales Tax Rate in Portugal averaged 21.48 percent from 2000 until 2024, reaching an all time high of 23.00 percent in 2011 and a record low of 17.00 percent in 2001.
source: Autoridade Tributária e Aduaneira
The Social Security Rate in Portugal stands at 34.75 percent. Social Security Rate in Portugal averaged 33.90 percent from 1981 until 2024, reaching an all time high of 35.50 percent in 1990 and a record low of 10.50 percent in 1981. source: Instituto da Segurança Social
The Social Security Rate For Companies in Portugal stands at 23.75 percent. Social Security Rate For Companies in Portugal averaged 23.80 percent from 1990 until 2024, reaching an all time high of 24.50 percent in 1990 and a record low of 23.75 percent in 2013.
source: Instituto da Segurança Social
The Social Security Rate For Employees in Portugal stands at 11 percent. Social Security Rate For Employees in Portugal averaged 10.98 percent from 1981 until 2024, reaching an all time high of 11.00 percent in 1990 and a record low of 10.50 percent in 1981.
source: Instituto da Segurança Social
The Withholding Tax Rate in Portugal stands at 25 percent. Withholding Tax Rate in Portugal averaged 25.00 percent from 2022 until 2024, reaching an all time high of 25.00 percent in 2023 and a record low of 25.00 percent in 2023.
In Portugal, the withholding tax rate is a tax collected from companies. It applies to businesses when they make payments to other business entities or individuals, e.g., in the form of dividends, interest, and royalties. The benchmark we use refers to the standard withholding tax rate on interest for non-residents. Revenues from the withholding tax rate are an important source of income for the government of Portugal.
