Foreign nationals' property acquisitions decrease
Portugal's Real Estate Market: A Booming Destination for Foreign Buyers
According to the latest Housing Price Index (IPHab) released by the National Statistics Institute (INE), foreign buyers accounted for 5.1% of home sales in Portugal from January to March, marking the lowest share since the second quarter of 2021. However, purchases by domestic buyers increased by a whopping 26.6% compared to the previous year.
In the first quarter of 2025, a total of 41,358 homes were transacted, equivalent to an annual growth of 25.0%. The total value of these transactions surged by 42.9% year-on-year, amounting to 9.6 billion euros.
The European Impact
Interestingly, the EU category accounted for 2.7% of the total transactions, while the remaining countries stood at 2.4%. Although the number of homes purchased by EU buyers grew by 12.1% year-on-year, purchases from buyers residing in the remaining countries declined by 8.3%, marking the fifth consecutive fall.
Regional Trends
The North region led the way with 12,285 transactions, accounting for 29.7% of all home sales, a slight dip compared to the previous year. Greater Lisbon and the Central region followed closely with 8,018 sales and 6,501 units respectively, representing 19.4% and 15.7% of the total.
Remarkably, the Setúbal Peninsula and Madeira reported the largest annual increases in terms of relative shares, up by 0.6% and 0.4% respectively. Conversely, Greater Lisbon and the Algarve, which accounted for 42.4% of the total value transacted, saw their regional shares decrease by 0.7% and 0.3% respectively.
The Appeal of Portugal
The ongoing appeal of Portugal to foreign buyers stems from various factors, including its lifestyle, quality of life, safety, climate, and relative affordability compared to other Western European countries. The end of the Golden Visa program for large cities has diverted interest towards properties with historical value, refurbishment projects, and homes in lower-density, high-potential areas such as Melides, Comporta, and the Alentejo coast.
Foreign buyers typically seek luxury properties offering spacious interiors, energy efficiency, and integration with natural landscapes. Common source countries include North America, Brazil, the UK, France, Germany, and Northern European nations. Many foreign buyers can secure mortgage financing, borrowing up to 70-80% of the property value at interest rates around 4% in 2025.
Domestic buyers, on the other hand, are sensitive to interest rates, with Euribor rates playing a significant role in mortgage affordability. Anticipated easing of interest rates during 2025 may improve borrowing conditions for local buyers, potentially boosting demand in the latter part of the year.
- Despite a decline in the share of foreign buyers in Portugal's real estate market, the European market still accounted for 2.7% of total transactions in the first quarter of 2025.
- In the booming Portuguese real estate market, the Algarve region, known for its Mediterranean climate and natural landscapes, saw a slight decrease in its regional share.
- As the appeal of Portugal continues to attract foreign buyers, investing in refurbishment projects, historical properties, and properties in lower-density, high-potential areas like Melides, Comporta, and the Alentejo coast remain popular choices.
