Market trends in Portugal 2023 – Is it better to buy or to rent?
What are the predictions for the 2023 housing market in Portugal? Is it better to rent or to buy? How are prices being affected due to rising interest rates, inflation, and the war in Ukraine? These are questions frequently asked by foreigners seeking guidance in unfamiliar territory.
The overall sentiment is that there is strong demand for listings, and new construction is not sufficient to meet the demand. This leads to increasing prices of existing inventory and with an inflation rate of 9.6% and average mortgage rates of 4%, the highest observed since 2015, buying property continues to be more and more expensive.
In the first three months of the year, the price of houses rose 17.2% compared to the same period last year. Despite this trend, there has been a significant increase in foreign real estate investment in Portugal over the last few years, particularly in the luxury housing sector.
A pronounced trend in the market is the dramatic escalation in 2022 from North American investors due to major fluctuations in the stock market, political and social unrest, and a growing preoccupation with safety, health care, and cost of living. Portugal is often compared to California and Florida because of its temperate climate and diverse landscapes. Cities such as Miami, New York, and San Francisco have begun to see price deflations, an increase in days-on-market, and below-asking price offers.
Foreign immigration has had a significant effect on luxury housing prices in Portugal, where buyers frequently are not dependent on mortgages and are able to pay cash. In a market where the demand is considerably greater than the supply, all-cash purchases are a trend likely to continue.
With rising housing costs and a shortage of inventory, many are turning to leasing, only to be overwhelmed with the high price of rentals. According to Idealista, an online housing portal in Portugal, there is a shortage of houses to rent in the residential market, with demand far outpacing the number of properties. Between the third quarter of 2022 and the same period in the previous year, the supply of houses for rent in Portugal fell 53%, and homes are on the market for less and less time, despite the much higher prices. According to Idealista, around 19% of homes let through their portal during October were on the market for less than 24 hours.
Portugal should stop being touted for cheap housing, particularly in the areas of Lisbon, Porto, and the Algarve, and start to be recognized for the spectacular and affordable quality of life it offers. More and more investors are recognizing the value of putting their capital into real estate in a country that is in a privileged geographical position, with a solid health care system, a peaceful population, and only a few hours by plane from numerous E.U. capitals and the U.S. East Coast.
Based on climate, visas, housing, healthcare, cost of living, the price of housing, and a friendly, generally English-speaking population, International Living Retirement Index rated Portugal the number one place in the world to retire in 2023.
But don't be misguided into thinking it's only for retirement. Portugal offers optimal living for families, digital nomads, and young professionals, and is a friendly environment for businesses and startups.
Copyright: The Portugal News