The coronavirus pandemic has taken the world by surprise, and if you are thinking about buying a property in Portugal, you will no doubt be asking yourself, ‘is this the right time to buy?’
Some benefits are here to stay. Portugal is renowned for offering a fantastic quality of life, thanks to (among many other benefits) a relatively low cost of living, outdoor lifestyle, great gastronomy and a mild year-round climate. Portugal has long been one of the most popular destinations for property investors, including lifestyle investors, keen to spend their holidays by the sea, work remotely or retire in sunnier climes.
The high number of tourists who visit Portugal every year has boosted the short-term rental market, creating a good source of income. Yet with the COVID pandemic, this benefit is on hold. Indeed, the number of passengers at some EU airports dropped for up to 86% in Q3 of 2020, and Portugal is concerned, with a drop of 71.8%.
The launch of the Golden Visa scheme in 2012, which allows non-EU nationals to obtain residency when purchasing a property of at least €500,000, has also made Portugal an increasingly attractive proposition. Consequently, Portugal consistently ranks in the top 10 countries for Golden Visa, alongisde two other European countries: Greece and Spain.
Prices in Portugal have been rising for several years and although the volume of sales has slowed due to the pandemic, prices have, so far, not been affected. However, the credit rating agency Standard & Poor earlier this year predicted a 2.5% drop in house prices in Portugal by the end of the year. But it also believes there will be a fast recovery and strong growth by 2022.
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The other winner in this crisis could be the remote worker, someone who has a job that allows him or her to work anywhere in the world. Portugal’s combination of affordable properties and an enviable lifestyle is an extremely attractive proposition for this emerging workforce. With employers being more flexible and allowing workers to telework from wherever they choose, Portugal is an excellent starting point.
On nomadlist.com, an authority for nomad workers, several Portuguese cities rank very high in the recommended cities:
- Ericeira (surfers’ paradise)
“Although there are nomads spread out all over the Algarve, particularly in places like Faro, Vilamoura, and Sagres, the majority end up in Lagos” – portugalist.com
There are also a growing number of (disillusioned) British citizens, who are keen to get EU residency ahead of the end of the year when the UK will have severed links with the Union for good. There is still time for Brits to get residency in Portugal, with the Algarve being a popular choice.
Despite the difficulty in travelling from overseas, most agents say that potential buyers have continued to search for holiday homes online. While a lot of this might be put down to idle scrolling due to having extra time on their hands during confinement and working from home, it could well be a sign of pent-up demand.
Once travelling restrictions are fully lifted, the number of transactions is expected to rise significantly, as buyers will have had time to reflect on exactly what they want to buy and why. Fast internet connection, outside space and a home-office are expected to be high on the list of priorities for buyers in the ‘new normal’.
In a few months, when prices are expected to have fallen slightly, sellers who have been patient throughout the last few months, may be more willing to negotiate. With a lot of market uncertainty, now could be the time to start negotiations, before everything opens up.
A key aspect for the real estate sector is that banks continue to provide competitive financing. Property investment looks to be a safe place to put cash right now, aided by the current low interest rates. Savings have not delivered good returns for years, so taking all this into account, investing in Portuguese property before the end of the year could well prove to be a canny decision.