For the past ten years Portugal’s property market has seen an irrepressible, year on year, rise in value and according to the latest figures the economically devastating effects of the global pandemic have done nothing to slow it down. The shot of adrenalin which brought the market to life was the introduction of a ‘Golden Visa’ scheme back in 2012, which enabled foreign investors, who purchased property in excess of 350,000 euros, to obtain residency rights for themselves and their families. In the ten years during which the scheme has been running it has generated 5.2 billion euros of foreign investment and driven property prices in Lisbon and the Algarve beyond the reach of ordinary people. So successful has the scheme been that the Portuguese government has now reduced the areas to which the scheme applies and raised the threshold investment to 500,000 euros.
The key achievement of the ‘Golden Visa’ scheme was to alert foreign investors to the potential of Portugal, which had hitherto been overlooked as Spain’s dowdy sister. Not only has Portugal an enviable Mediterranean climate, a thousand-mile coastline bejewelled with some of the best beaches in the world, one of the lowest costs of living in Europe and one of the lowest crime rates in Europe, but it also has a heritage of fine old buildings ripe for redevelopment.
According to Confidencial Imobilario, average house prices in January 2022 showed an increase of 13.8% since January 2021. The average cost of property, measured per square metre, now stands at 2,000 euros, though there is a considerable gap between the cost of new housing, 3,088 euros per square metre and old housing, 1,871 euros per square metre. The average property price in January 2022, according to the property platform Imovirtual, was 372,000 euros. As one would expect, there is considerable difference in property prices across the country and although most areas have seen an increase in prices there are some inland areas where values have dropped. Evora, where average property prices now stand at 252,293 euros, has seen a huge 35.8% increase in property prices since January 2021, whilst the biggest loser in terms of property values is Portalegre where the average cost of property is just 122,997 euros, a drop of 9.7% since January 2021. By comparison, the capital, Lisbon, remains the most expensive area in which to buy property. Average prices here are up 5.8% on January 2021 and currently stand at 588,355 euros, which still makes property in Lisbon some of the cheapest capital city accommodation in Europe.
Construction has also seen an increase since house prices began to accelerate again in the middle of last year and despite the constraints of the pandemic there has been an increase in transactions and demand for licenses, both for construction and the refurbishment of old buildings. The construction industry however is struggling to match demand and is hindered by a global shortage of materials and a shortage of skilled labour.
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