Real estate investors continue to view the neighbouring country as a safe haven. Portugal is experiencing significant growth, which is having a very positive impact on the residential segment, which has attracted many foreigners to purchase property.
Why invest in the property market in Portugal?
Here we outline the main reasons for the growth of the residential segment in Portugal:
Economic stability. It is having a very positive impact on the residential segment. The trend of Upward growth in the housing sector is bolstering expectations and investment momentum. In this regard, as in Spain, residential property is one of the segments that inspires the most confidence in Portugal.
Preferred tourist destination. Considered one of Europe's most attractive holiday destinations, short-stay accommodation is experiencing growing demand. In fact, the Algarve region and the city of Porto are among the world's top ten luxury residential destinations.
Construction and refurbishment. The latest figures from the INE indicate that in the first quarter of 2023, a total of 5,919 licences were issued for new construction or renovation of residential buildings. These figures represent a decrease of 13.21% compared to the same period in 2022. However, the number of licensed new-build homes continues to show an upward trend compared to the same period last year, with growth of 4.51% to 11,063 units.
Increase in the volume of mortgage financing. The total amount of loans for new housing granted by financial institutions in Portugal amounts to €5.802 billion, an increase of 5.91% compared to the same period last year.
Appreciation of the property. The Property valuations are also revealing. The average value of residential properties appraised for mortgage guarantee purposes continues to rise, with growth of 10%. Of this increase, we note that 10.6% corresponds to flats and apartments, and 5% to detached single-family homes and independent houses.
The country attracts foreign investors. Foreign buyers are also responsible for driving the Portuguese mortgage market.
By nationality, French, British, Brazilian, Chinese and American buyers mainly dominate the Lisbon market, spending 95% more on residential properties than domestic buyers, according to data from the Bank of Portugal.
In short, Portugal is experiencing a situation similar to that of its neighbour, Spain. Despite the European economic situation, the materials crisis resulting from the war in Ukraine and the loss of purchasing power of the Portuguese population, the property sector, and in particular the residential sector, seems to be postponing its stabilisation.