Portugal is very much open for business again. In this property market update, we look at what you can expect if you visit the country to go house hunting, and what’s happening with the market generally.
Portugal’s been in the news rather a lot in the UK lately. It was one of the first destinations added to the “green list” for Covid-safe overseas travel. Over 5000 people headed to Portugal on the first day that restrictions eased. Feedback from many indicates that both the travel and the experience of being there is surprisingly “normal.”
However, at the time of writing, we are expecting an announcement that will reveal that Portugal has been moved from the ‘green’ list to the ‘amber’ list.
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It’s important to remember that we are still living in a pandemic era, so there are some details it’s wise to be aware of. We will begin by looking at the Portuguese property market in general, but be sure to read to the end of the article for some information on the practicalities of visiting to view property.
Firm conclusions about the Portuguese property market are difficult to reach at the moment, especially where data is involved. Everything has been skewed by periods of lockdown, and lack of access to the country has inevitably impacted sales. An appropriate three word summary would be “steady but subdued.”
However, pent-up demand seems set to change that picture rather swiftly. Developers are expecting a 5% increase in sales by August.
Here’s a good example of the skewed data: The latest RICS housing market survey, based on agency feedback from February, showed a “slight softening” in prices. However, year-on-year figures, based on official bank valuations, sit at an average increase of 7.8%. There are some notable hotspots too, with prices on the Alentejo coast up 11%, and Porto’s valuations up 14.7%.
It seems unlikely that there will be the same kind of increase between 2021 and 2022. However, nobody’s expecting any kind of crash either. Prices are expected to remain steady, with the Portuguese Association of Real Estate Developers and Investors expecting a small increase of around 0.3%.
The rental market
The picture for the Portuguese rental market is a rather more complicated one, and one where the ongoing pandemic certainly introduces an element of “wait and see.”
The Portugal property market has always had a delicate line to tread with rentals. Owners have a choice between the relative stability of long-term tenancies, and the (potentially) much higher returns from holiday lets. Covid had a profound impact on this balance, leading to rental prices falling – something that’s not happened for a considerable time.
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Only time will tell how this shakes out. There was a huge 742% increase in demand for holiday rentals when the UK put Portugal on the “green list.” However, this is clearly relative, and much will depend on what happens with travel more widely. If you’re considering investing in rental property, it’s wise to consider different scenarios, and how they may affect demand over the next few years.
A word on Brexit
Portugal has always been hugely welcoming to Brits, and there’s no sign of that changing. Visit Portugal has even adopted a hashtag of “#Brelcome,” to enforce that depth of feeling.
This attitude to tourists extends to those who are considering a permanent move. It seems that many of the people who headed to Portugal from the UK recently fall into that category. The Chamber of Commerce referred to a “flood” of people with ambitions of moving to Portugal.
Portugal has long demonstrated that it welcomes overseas residents, as proven by initiatives like the Golden Visa and the non-habitual resident tax scheme. However, it’s important to remember that Britain is now a “third country” when it comes to residency rules and other bureaucracy.
With this in mind, the best advice is not to assume that permanent residency is a given. You should certainly do your research, and determine what you will need to provide in terms of proof of income and other requirements. Without residency, you will only be able to remain in Portugal for up to 90 days in each 180 day period.
Travelling to Portugal
At the time of writing, travelling to Portugal from the UK is reasonably straightforward. You need take a negative PCR test two days before your departure, and another on your return. There is currently no requirement to quarantine when you return from Portugal.
Rules can vary if you’re travelling from other countries, and direct non-essential travel from some places, such as the US, is still not allowed. It’s wise to check for the most up to date advice, as things can change quickly. As things stand, the situation is fairly relaxed within the European Schengen area, and land borders with Spain are open at the time of writing. Everybody arriving in Portugal for tourism reasons is required to fill out a passenger locator form.
Property viewings and practicalities
You shouldn’t experience any difficulties arranging property viewings in Portugal. On the contrary, you will find agencies keen for normal service to resume!
However, it’s important to remember that Covid isn’t over. You will be expected to wear masks and follow social distancing guidelines. Culturally, Portugal is a country with considerable respect for authority, so you WILL be expected to abide by the rules.
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The same applies when you’re moving around the country. There are strict rules around mask wearing, and some tourists have been surprised to see that they are actively enforced – even by the beach! The best advice is to check here for the most up to date information. Keep in mind that different towns or municipalities may have their own specific guidelines.
Portugal will be looking to make up for a lot of lost time in the months ahead – as will many of the house hunters who visit. But the good news is that the Portugal property market is expected to remain steady. There’s no need to panic or rush – so take time to enjoy the slow pace that the country is renowned for.