Portugal has long been a popular holiday and second-home destination…
But its popularity has skyrocketed in the past few years—particularly among North Americans.
As news of the great lifestyle it offers has spread, more North American expats have settled here… meanwhile, property prices have increased, even reaching unprecedented levels in the most coveted areas of the country.
Portugal Letter sat down with Susanna Gross, Sales and Marketing Manager at a licensed real estate agency that has sold properties throughout the Algarve since 2005, to get an insider’s take on the current realities of the market.
What advice would you give anyone looking to buy property in a popular area (like the Algarve) right now?
Susanna: In the years following the pandemic, property interest has soared, and there was a race to catch up in Portugal real estate sales…
This regressed in summer 2023 and continued at the beginning of 2024 due to a shortage of properties for sale, high inflation, high interest rates with high bank fees, two global conflicts, and the end of the Golden Visa for real estate purchases.
New laws within the Portuguese government in the housing sector have affected short-term rentals, and the long-term rental market is currently non-existent in Portugal…
The government wants to protect locals with these new laws, get appropriate long-term rental contracts, and offer housing opportunities for Portuguese buyers.
In Lisbon, Porto, and the Algarve, it’s difficult for locals to find a home for reasonable prices because of the short-term rental market, which is more profitable.
All of that said, Portugal’s popularity makes sense. It’s a beautiful and affordable country with a low crime rate and a fantastic climate throughout the year.
It’s a peaceful country, so it makes sense that so many foreigners like to come here and enjoy their holidays and then decide to stay and buy a property.
For those interested in renting or buying in Portugal, I would recommend traveling around to get to know the different areas…
You need to be on the ground to fully understand the differences in location, climate, infrastructure, and amenities. For the biggest English population centers and best infrastructure, you should look at Lisbon, Porto, and Algarve.
Susanna: The short-term rental market is plentiful, especially for tourists…
However, the long-term market needs to be protected and improved. The government wants to reduce the number of additional private owners offering short-term rentals in Lisbon, Porto, and tourist areas to protect the local population.
PL: What issues do prospective buyers face right now?
Susanna: This depends on the area… The Algarve is facing a real shortage of properties and very high demand; therefore, prices are high. It’s the same in Lisbon and Porto.
It takes time to construct new property, new resorts, condominiums, etc…. but there are plenty of resale properties available.
It’s important that potential buyers are aware of legal changes within the real estate sector, so they can be guided to find their ideal property.
PL: Prices have been on the rise across Portugal for some time. Do you think they’re at their peak?
Susanna: I hope so, as the market has stalled because of inflated prices and a shortage of affordable properties in the Algarve. The prices need to be adjusted to meet the current market situation.
PL: What’s the best area for an investment property in Portugal?
Susanna: Lisbon, Porto, and the Algarve are the best investment locations, but prices are very high.
The Algarve’s popularity has real stamina. It is and always has been a popular tourist destination for holidaymakers, as well as for investors and permanent living…
With an international airport in Faro, it’s easy to reach, and soon, there will be an airline connection from Faro to New York with more routes to follow.
PL: What’s the next horizon in Portugal… the place everyone will be talking about in 5 to 10 years?
Susanna: Oh, a very difficult question. The Algarve, Lisbon, and Porto will always be talked about.
Sintra and Setúbal, just north and south of Lisbon, are increasing in popularity, but I believe the Alentejo region will soon become more well-known and desired.
It’s relatively unknown, but it has stunning panoramas, lots of water and rolling hills reminiscent of Tuscany, and it’s agriculturally rich with vineyards, olives, and fruit.
It’s perfect for eco and rural tourism. There’s plenty of land to cultivate for farmers, making it attractive for self-sufficient lifestyles and ideal for animal lovers.
The inland regions of the Algarve are always gaining in popularity, particularly the mountains and rolling hills of the Serra de Monchique and the Silves and Messines area, which are not far from amenities, airports, and social opportunities. Plus, the medical facilities are good.
These will certainly be on buyers’ and investors’ watchlists in the next 5 to 10 years.
Bonne route,
Kat Kalashian
Editor, In Focus: Europe
