• Market trends

    Is it wise to buy a property good in Portugal? Is there a real estate market bubble in Portugal? What is the average price per sq. meter in Lisbon? And in the Algarve? If I buy a property in Portugal, will I be able to resell it easily at a good price? Is the Portuguese real estate market over valuated or instead, are the prices at the lowest level? Which are the regions to invest at the present moment?

    The queries from our clients show their true worries.

    Supported by a combination of sources, we have compiled an overview of the Portuguese property market, trends and the risk associated.

    Brief history of the Portuguese real estate market

    The beginning of the real estate crisis:

    The crisis in Portugal stated in 2008, following the subprime crisis in the USA. Although the property market has not grown in an exponential manner, in the 2000’s the trend has been contrary to other European markets. Boosted by the 1998 Lisbon World Exposition and the 2004 UEFA European Football Championship, property investments have thereof slowed down and new developments have been regular but not significant (image 1).

    Image 1. The number of residential licences in Portugal.

    Thus, in spite of the financial crisis in 2008, there isn’t a situation of overstock or speculative bubble.

    What is happening, then? The Portuguese property market has been supported by credit between 2003 and 2008. In 2008, the Portuguese banks stopped lending money at the ease as they had been doing. As shown on Image 2, the volume of transactions fell dramatically.


    Image 2. Number of mortgages and estate transactions in Portugal.


    As a consequence, prices have dropped not because of a speculative bubble (like in Spain, where prices had risen artificially) but because internal demand had a cutback (most people cannot afford to buy a house without a loan). Prices have been falling between 2008 and 2013 (Image 3), but not in a drastically since there was no need for significant adjustments.

    Is Portugal a good spot for property investment?

    The average price per sq. meter is among the lowest in Europe, as shown on Image 4. The situation allows more room for you budget. 

    The price decreases due to the financial crisis have given rise to new an equilibrium that is still to be readjusted, thus creating a good momentum for investments. The OECD comparative study (Image 5) shows that the Portuguese market is undervalued.


    Image 3. Property price evolution in Europe.


    Is Portugal a good spot for property investment?

    The average price per sq. meter is among the lowest in Europe, as shown on Image 4. The situation allows more room for you budget. 


    Image 4. Real estate price per sqm in Europe.


    The price decreases due to the financial crisis have given rise to new an equilibrium that is still to be readjusted, thus creating a good momentum for investments. The OECD comparative study (Image 5) shows that the Portuguese market is undervalued.

    Image 5. Overvalued and undervalued property in Europe.

    There are signs of recovery in the Portuguese property market, pulled by a renewed confidence in the economy and an internal demand that is slowly returning to increase.

    Economic indicators for the end of 2013 and the first quarter of 2014 suggest significant improvement in the real estate market. More demand, more transactions and price increases, especially in Lisbon, boosted by both foreign demand (attracted by beneficial tax conditions) and local buyers (due to the still weak but awakening mortgage credit). 

    This is the right time to invest.