Portugal continues to attract a large number of foreigners who in turn invest in property, thanks to the country's climate, safety, beaches and much more. So much so that the demand for houses to buy continues to be much greater than the existing supply in the residential market. It is, above all, in this imbalance that lies the trigger for the continued rise in house prices in the country, quarter after quarter. All households are buying more expensive homes and, in this panorama, foreigners end up spending 63% more than citizens in Portugal. But where have the Portuguese and foreigners been buying more expensive homes? And how much have prices risen? idealista/news has dipped into data from the National Statistics Institute (INE) and explains everything.
Resident and non-resident buyers in Portugal
All home buyers, in general, are paying more for the houses they buy in Portugal. But there are differences in the average prices paid on the sale of homes depending on the origin of the buyer, show data from INE released at the end of October and analysed by idealista/news:
- Residents in Portugal (buyers with tax address in Portugal): they paid, in average terms, 1,372 euros per square metre (euros/m2) for a home in the last 12 months ending in June, 14% more than they paid a year ago. And 4% more than they shelled out in the same period ending in the first quarter of this year;
- Non-residents in Portugal (buyers with tax address abroad, European Union and other countries): buying a house cost 2,234 euros/m2 in the last 12 months ended in the second quarter of 2022, 19% more than a year ago. And compared to the same period ending in the first quarter of 2022, houses in Portugal were 3% more expensive for foreigners.
This means that foreigners are buying houses in Portugal that are 63% more expensive, in average terms, than residents in Portugal. In other words, a foreign family buys a house of 100 square metres for 223 thousand euros, while a Portuguese family buys a house with the same 100 square metres for 137 thousand euros (-86 thousand euros).
It is also worth noting that it is those buyers with tax residence outside the European Union (EU) that buy properties at higher prices: in the last 12 months ending in the second quarter the average price of houses sold was 2,592 euros/m2, up 12% on the same period in the previous year. Foreign households living in EU countries, meanwhile, bought homes at an average price of 1,950 euros/m2 in the year ended June, up 14% on the same period in 2021.
The chart below shows the average house prices per m2 in Portugal per buyer origin in each quarter since the 4th quarter of 2019. Green represents residents in Portugal, while purple shows non-resident buyers.
Buyers resident in Portugal: where do they buy the most expensive houses?
Tax resident buyers are paying higher house prices in all 24 municipalities with more than 100,000 inhabitants, INE data shows. The biggest year-on-year rises in median sold house prices were seen in Gondomar (+17%), Seixal, Vila Nova de Gaia, Sintra and Braga (all with rises of 15%). The least significant price rises were recorded in Guimarães (+7%) and Odivelas (+8%).
In comparison to the last 12 months ending in the first quarter of 2022, purchasers residing in Portugal felt house prices rise the most in Barcelos (+7%), Funchal, Leiria, Vila Nova de Gaia, Sintra, Santa Maria da Feira and Setúbal (all with 5%). And less in Guimarães and Matosinhos (around +2%), for example.
Unsurprisingly, Lisbon is where families who are resident in Portugal pay the most to buy a house: a 100m2 property costs 357 thousand euros on average (3,574 euros/m2). Next in line are Cascais (3,216 euros/m2), Oeiras (2,815 euros/m2) and Porto (2,378 euros/m2), INE reveals.
Within municipalities with over 100,000 inhabitants, it is in Santa Maria da Feira, Barcelos and Guimarães where residents in the country buy the most affordable housing, the data shows.
Foreign buyers: where have property prices have risen most in Portugal?
Foreigners who buy property in Portugal generally pay more on average. This is because the prices of houses transacted by international buyers have risen in practically all the municipalities with more than 100,000 inhabitants - the only exception was in the municipality of Seixal where median values fell by 2% year-on-year.
Comparing the prices of houses sold in the year ending June with the same period in the previous year, it can be seen that foreigners purchase houses that are 24% more expensive in Funchal (Madeira). Also in Cascais (+20%), Almada (+16%) and Braga (+13%), foreigners bought houses at higher prices than last year.
For the last 12 months ending March 2022, Guimarães was the place where foreign buyers spent the most on buying a home (+18%), followed by Funchal (10%) and Braga (9%). As in the year-on-year analysis, only in Seixal did these families with tax domicile abroad pay less for their homes (-13%).
It is also in the municipality of Lisbon where foreigners buy the most expensive houses of all, paying, on average, 5,230 euros/m2 - 46% more than families residing in Portugal pay in the capital. The ranking of municipalities where foreigners buy the highest priced houses continues with Cascais (4,749 euros/m2) and Porto (3,287 euros/m2).
The municipality where foreigners buy the cheapest houses is Guimarães (858 euros/m2), Braga (1,280 euros/m2) and Leiria (1,320 euros/m2).
It should be noted that in the analysis of the median values of homes sold to foreign buyers there is no data available for Amadora Barcelos, Matosinhos, Gaia, Gondomar, Maia, Santa Maria da Feira, Coimbra, Odivelas and Vila Franca de Xira, and Vila Nova de Famalicão.
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