Property prices in Portugal: how to buy or rent housing as a foreigner

The average cost of real estate in Portugal is €1,478 per 1 m², according to the National Institute of Statistics (Instituto Nacional de Estatística, INE). At the same time, the market value is several times higher than the official statistics. There are two reasons for this.

First, portal analysts and agencies only consider the properties they helped sell. The average value is calculated based on the amount that the seller declares.

Second, official statistics use closing prices. Thus, for example, the Idealista portal states the average residential property price as €2,475 per 1 m², while the Engel&Völkers agency provides €3,800 per 1 m².

The prices are also affected by foreigners buying or renting housing in Portugal to apply for the D7 visa and get a residence permit.

The average residential property prices in Portuguese regions, according to the INE, are the following:

• Lisbon — €2,082 per square metre; 
• Algarve — €1,972 per square metre;
• Madeira — €1,558 per square metre;
• Northern — €1,36 per square metre;
• Azores — €1,387 per square metre;
• Central — €1,130 per square metre;
• Alentejo — €1,025 per square metre.

Nonetheless, Portuguese real estate is one of the most affordable in Europe. The average price per 1 m² of residential property is €9,609 in Austria, €8,281 in Norway, and €6,589 in Italy.

Lisbon region is Portugal’s most populous and expensive. According to the INE, the average price of an apartment or house here is €2,100 per 1 m².

Engel & Völkers estimates that more than a third of Lisbon residencies are bought by foreigners. The leading investors are citizens of France, the UK, Brazil, Germany and China.

Foreign buyers are drawn to the historic districts of Lisbon, Alcântara and Penha de França.

The most expensive suburb of Lisbon is Cascais. It is popular among tourists and citizens alike, so villas and apartments here are in demand.

The Algarve region draws in visitors with its Mediterranean beaches and golf courses. The average price of an apartment or house here is €2,000 per 1 m².

Nine out of ten properties in the region are purchased by foreigners, according to Engel & Völkers. The city of Albufeira, Praia do Carvoeiro, and Porches are the most popular areas. 

Madeira is an archipelago of eternal spring popular with tourists and foreign investors. Over the past year, apartments in Madeira have grown in price by 17%, while houses grew by 14%. The most expensive city in the archipelago is Funchal.

The Central region is home to the University of Coimbra, which is in the top 500 of the prestigious QS World University Rankings. One-third of the city's residents work or study at a university. 

According to Idealista, Coimbra's average real estate price is €1,700 per 1 m².

The Northern region is where Porto, Portugal's second-largest city, is located. Residential properties are in constant demand: apartments are sold for approximately €1,400 per 1 m², and houses for €1,100 per 1 m².

The most affordable prices are in the area of Aldoar, the highest — in Bonfim.

Azores' apartment prices are increasing by 10% a year. The average price is €1,400 per 1 m². Ribeira Grande, Nordeste and Vila Franca do Campo have the highest real estate prices.

Alentejo is the hottest and least populated Portugal region. The average apartment price here is €1,000 per 1 m², and the average house price is €1,100 per 1 m².

Purchasing Portuguese real estate can be a remote process. An attorney concludes a purchase and sale agreement on behalf of the buyer. To complete a transaction, the buyer will need to:

1. Get an individual taxpayer number, or NIF. Citizens of non-EU countries can do this through a lawyer or tax representative. 
2. Open a Portuguese bank account through a lawyer. Only citizens and residents of the country can do this online.
3. Enter into a preliminary agreement that includes a description of the apartment or house, price, payment procedure, and rights and obligations of the parties.
4. Deposit of 10—30% of the housing cost. If the buyer changes their mind and backs out of the agreement, the deposit will not be returned.
5. Get a land registry document (Caderneta Predial Urbana) containing information about the property's location, area, number of bedrooms, and other characteristics.
6. Request a registration statement (Certidão de Teor) that contains information about the property type, location and owner.
7. Pay the IMT property tax 0.3 to 0.8% of the cadastral value.
8. Choose a notary who will review the documents.
9. Pay the remaining funds for the property minus the deposit.
10.  Sign the purchase and sale agreement in the presence of a notary.

The notary sends copies of the contract to the tax inspectorate and the Land Registry (Conservatoria do Registo Predial) to register the new owner.

Citizens of Portugal, as well as foreigners over the age of 18, can get a mortgage loan to buy a house or apartment. 

Portuguese banks issue loans to purchase residential properties on new and secondary markets. A loan agreement term can range between 2 and 40 years.

The average mortgage rates in Portuguese banks are 3.3%. They depend on the initial payment, the borrower's financial condition, the property's value and the mortgage's term. For example, the BPI bank issues mortgage loans to non-residents at a fixed annual rate of 5.9%. The maximum loan amount is €150,000.

The down payment on a mortgage in Portuguese banks is 20—50% of the property value. For example, the minimum down payment on a loan is 20% in Novobanco and 30% in Santander Bank. The annual mortgage rate varies from 4.9 to 6.0%.

Before applying for a mortgage, banks evaluate real estate. This is a paid service: for example, BPI charges €340 for it. 

Some banks list villas or apartments for which the mortgage is approved on their website. For instance, a list like this can be found on the Millennium BCP website.

Applications for mortgage loans are accepted at Portuguese bank branches or online. For example, applications and documents can be submitted via the Novobanco website. After the credit department makes a mortgage decision, it notifies the borrower.

Owners of apartments and houses in Portugal pay annual municipal tax, the IMT, at 0.3‑0.8% of the property’s cadastral value. Each municipality sets its own rate.  

If a property value exceeds €600,000, the AIMI wealth tax is levied. It is calculated at 0.7—1%.

Maintenance costs for Portugal residences include not only taxes but also utility bills. Electricity, water, and gas prices depend on the time of year, region, and tariff.

Electricity. Prices depend on the season, day of the week, and meter type. The average price is €0.15 per 1 m². Central heating in Portugal houses is rare, so electricity rates in winter are higher.

There are three types of electricity tariffs in Portugal:

• simple (tarifa simples) — electricity prices are fixed and do not depend on the time of day;
• double (bi-horária) — prices are lower between 10 pm to 8 am;
• triple (tri-horária) — prices depend on the hours of the day and the period of the year. The most expensive are the hours between 8:30 am and 10:30 am and 6 pm and 8:30 pm. On Saturdays, the peak hours are moved to 9:30 am to 1 pm and 6:30 pm to 10 pm.

For example, GALP, an electricity provider in Portugal, charges €0.18 per 1 m² during peak hours and €0.09 per 1 m² during off-peak hours.

Owners can use a phone or a mobile app to submit meter readings.

Water. The cost of water supply in Portugal depends on the residence area. The lowest tariffs are provided in the south of the country. For example, consumers pay around €250 per 120 m³ of water in Vila do Condi and about €88 per 120 m³ in Vila Nova de Foz Coa.

Gas. Some apartments in Portugal are connected to the gas distribution network. Each region has its own supplier and tariffs. For example, Lisboagas supplies gas to the residents of Lisbon, Cascais and 14 other municipalities. 

If there is no gas network, owners buy gas cylinders. Prices per litre vary from 3 to 14 cents.

Safety and comfort. An insurance broker Insurly has listed Portugal among the 20 safest countries in the world. The country is rarely affected by natural disasters and has low crime rates and friendly locals.

Lisbon, the capital of Portugal, is in the top 5 countries for expats, according to Expat Insider. Lisbon is popular with tourists: the city has many attractions, places for walking, and clear and warm weather: the sun shines 250 days a year. 

The hallmark of Lisbon is St George's Castle. Among the most visited attractions are the Jerónimos Monastery, the Tower of Belém, the Baixa downtown, Santa Justa Lift, the Eduardo VII Park, and the Palace of Ajuda.

Profitable investment. Real estate in Portugal can be a liquid asset, with prices rising steadily. On average, housing prices in Portugal have increased by 12% over the year. 

The secondary real estate market prices are growing faster than the primary one.

Dynamics of residential real estate prices in Portugal, according to the INE

In 2022, foreigners bought €3.6 billion worth of real estate in Portugal, which was a 20% year-on-year increase.

Guaranteed profitability. Foreigners can rent out properties that they have bought in Portugal. Over the past year, rental rates have increased by 23%.

According to the Global Property Guide portal, the average annual apartment yield is 5.6% in Lisbon, 5.9% in Funchal, and 5.7% in Setubal.

Rental prices depend on the region, the lease term and the property’s size. In tourist areas, rental rates are higher.

Rental rates in Portugal, according to Numbeo

Residence permit eligibility. Renting or buying real estate in Portugal is required to get one of the national visas that lead to a residency status:

• Portugal D7 Visa is issued to foreigners with a minimum passive income of €11,040 per year; 
• Portugal D2 Visa is issued to entrepreneurs who either have invested in a Portuguese business, have a new business plan to submit, or are planning to open a branch of their foreign company in the country;
• Portugal Startup Visa is issued to entrepreneurs who submit an innovative startup idea and conclude an agreement with a Portuguese incubator;
• Portugal HQA Visa is issued to skilled foreign professionals who get an employment offer in the country with a minimum salary of €1,568 a month.  

After receiving one of these visas, foreigners and their families have 4 months to arrive in Portugal, find a property to live in and apply for a residence permit. 

The residence permit card will be issued for 2 years and can be renewed for another 3 years. Foreigners with a Portugal residence permit can:

• live, work, and study in the country;
• have visa-free entry to any Schengen Area or EU country and spend 90 days in any 180 days there;
• apply for citizenship after 5 years of permanently residing in Portugal.

1. Portugal's highest residential property prices are registered in Lisbon, Algarve, North Region, and Madeira. 
2. Mortgages are available for foreigners. Portuguese banks issue mortgage loans at an average rate of 3.3%.
3. Owners can rent their properties out. The average rental yield in Lisbon is 5.6%.
4. A residence permit can be issued to foreigners who purchase or rent a property in Portugal. To get the permit, they choose a national visa:  Portugal D7 Visa, Portugal D2 Visa, Portugal Startup Visa, or Portugal HQA Visa.