12% of homes sold to foreign investors in Portugal

The real estate market in Portugal continues to boom, thanks to the foreign investors who continue dominating the sector, a report has indicated.

According to news portal ECO, data released by the Bank of Portugal in the November Financial Stability Report suggests “in the accumulated of the four quarters ending in June, non-resident buyers represented 11.7% of the value of housing transactions in Portugal” - as compared to the transactions carried out by foreigners in the previous year which equates to 8.9 percent.

Bank of Portugal reveals that “housing transactions by non-residents have increased significantly in the recent period, in particular involving buyers residing outside the European Union”. The report reflects that the amount of business in the real estate market involving non-resident buyers reached almost €30 billion in Q2 2022 as compared to below €25 billion in the same period last year. This significant demand in real estate goes parallel in the rise in property prices.

Going by the transactions carried out in the Urban Rehabilitation Area (ARU) of Lisbon alone , the Bank of Portugal, citing data from Confidencial Imobiliário , reveals that 801 properties were traded by non-resident buyers, 36 percent more than in the same period of 2021. Among the main foreign buyers of ARU houses in Lisbon in the first semester are the French, who were responsible for 15 percent of the deals carried out.

Source: Confidencial Imobiliário

However, in the last five years, according to data from Confidencial Imobiliário, the foreigners who bought the most houses on the ARU in Lisbon were Chinese nationals. The Chinese investors were also notable for selling 1,371 properties since June 2017, equating to 18 percent of the total number of houses purchased by foreigners in this period. The French were the second biggest investors in this category were responsible for 16 percent of the the transaction of properties in the last five years.

“House price growth has been more pronounced in regions where the weight of non-residents is higher and the percentage of housing transactions financed by domestic credit is lower”, says the regulator in the November Financial Stability Report. The purchase of a house by foreigners continues to be mostly carried out with little recourse to bank credit. “Home loans to foreign citizens have increased in the recent period, but it continues to have a small weight”, reveals the Bank of Portugal, also indicating that the average transaction value by non-resident buyers is 95 percent higher than that of resident buyers.

Among those who pay the most to buy houses in Portugal are buyers with tax domicile outside the European Union, in which the average transaction value in the first half of this year was €414,000, equivalent to about 143 percent above the national average. Meanwhile the Bank of Portugal has confirmed that the Real estate transactions involving buyers with tax domicile in other European Union countries, reached an average value of €265,000, signifying around 55 percent above the average transaction value of buyers with tax domicile in Portugal.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. SSIL does not guarantee the accuracy, legality, completeness, reliability of the information and or for that of subsequent links and shall not be held responsible for any action taken based on the published information.