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REAL ESTATE PRICES IN PORTUGAL: ANALYSIS

REAL ESTATE PRICES IN PORTUGAL: ANALYSIS
By Joana P. . 5 years

Before taking any decisions regarding your new investment, you are most likely to be looking for the analysis of real estate prices in Portugal. This article is for you. Here you will learn about market trends, the most expensive areas  and the current price averages.


Attractive prices per m2

 

Compared to other European countries, property prices in Portugal per m2 are considerably lower. Indeed in 2015 it averaged at €2,213 as opposed to €4,022 in Spain, €11,397 in Switzerland and €13,380 in France. This average is based on prices currently charged across the country and they vary according to different criteria such as:


● Location of the property: it will be more or less expensive depending on its location. Certain areas and certain towns or regions are priced higher and therefore are more expensive than others;
● The age of the property: new, renovated or in need of renovation;
● Facilities available: elevator, private parking space, balcony or terrace;
● The floor in a block of apartments, the higher the flat is - the higher is the price.

Furthermore it should be highlighted that country has a large number of very ruined buildings scattered throughout its territory.


The trend of the Portuguese property market has, as we have seen in our article «Housing market trends in Portugal», a renewal of interest among foreign investors. Here we look closely at the current dynamics in the Algarve as well as in Lisbon. 


The lure of the Algarve

 

Overseas demand - particularly that of European retirees from outside of Portugal, is what primarily boosts this region. Indeed the Algarve represents 50% of the market share [in terms of property]. Their objective is of course to enjoy a better quality of life but their decision is also influenced by the fiscal advantage offered by the country. 


In this region there are two possible markets. The first the Portuguese luxury market which in 2012 made up 27% of property transactions over €1,000,000 in value. The second is more modest, but more important in terms of percentage (51% of transactions) market of properties with a value of between €100,000 and €500,000, with this market experiencing an increase of 15% in a year.
Despite a  price drop in 2013, it appears that , in May 2015, average prices  for property (including those in need of renovation) in two of the most touristic towns are as follows:

 
● Loulé: 
- for an apartment the cost per m2 is expected to be €1.914
- for a house €2.586 m2

 

● Albufeira:
- €1.729 per m2 for an apartment
- €2.029 per m2 for a house


The lure of Lisbon

 

Speaking about property value in Portugal, the prices in Lisbon were least hit by the 2008 crisis, with a decrease of 10% compared to 25% in the rest of the country. According to Imovirtual, Portugal’s average price in 2015 was €2680 per m2 for an apartment and €3301 per m2 for a house. 

These prices vary depending on the location of a property in the city. It is good to know that this city is very dynamic and even sees some of its areas suffer from a shortage of supply in relation to demand. Thus a purchase in the historic areas of Lisbon would need between €2900 and €3300 euro per m2
For the year 2014 the SIR (Sistema de Informação Residencial da Confidencial Imobiliário) established a ranking that lists Portugal’s most expensive neighborhoods :


● Santo António (a 150 m2 luxury apartment is worth more than €1.000.000, for mid-range properties expect at least €580,000);
● Misericórdia (medium prices);
● As Avenidas Novas (price per m2 of mid-range apartment is 3599 euro per m2, more luxurious apartment costs €6800 per m2);
● Santa Maria Maior (a district which has undergone various renovations in recent years);
● O Parque das Nações (now replaced by the more historic areas of Lisbon, two years ago it was amongst the most expensive).


A good time for investment


According to S&P, after examining various economic indicators, the real estate price boom in Portugal will continue over the next years. Indeed as Les Echos Patrimoine states in its article, Portugal has experienced mild inflation.  Thus with a rate was +0.4% in 2013 and +1.9% in 2014. S&P estimates that such an increase is confirmed by the rates of +4% in 2015, +3% in 2016 and +2% in 2017.

 

With such beneficial forecast, by acquiring property in Portugal today you could see a hefty return on your investment within a couple of years.