What is the average price of a house in the Algarve, Portugal? The short answer is that real estate is surprisingly affordable, with prices comprised between €1,500 and €3,000 per square meter, on average.
The Algarve has long been one of the most popular destinations for holidaymakers and property investors from around the world. Despite its popularity, this beautiful Portuguese enclave has remained relatively unspoiled and has kept much of its authenticity.
Its year-round warm climate, beautiful beaches, low cost of living, outdoor lifestyle, exclusive golf courses, good infrastructure, charming villages and award-winning gastronomy have been well documented, contributing to the region consistently being labelled one of Europe’s top property hotspots.
The region is a consolidated destination in terms of real estate, with a wide range of properties, from apartments and villas in resorts to income-generating investment properties.
Tourism plays an important role in the local economy and the region is particularly popular among British visitors. The current pandemic evidently had a significant effect on the number of tourists visiting the region during the summer, although it was given a late boost when the UK decided to include Portugal in its ‘air bridge’ list.
The central and western Algarve tend to be more well-known thanks to resorts such as Praia da Luz, Lagos and Albufeira. The Eastern Algarve has a different feel, with pretty, authentic towns offering a slower pace of life such as Tavira.
Like everywhere, The Algarve’s property market has been affected by the current health crisis. Figures from Portugal’s Institute of Statistics’ (INE) for the second quarter of the year shows that the number of sales transactions in the country went down by 38% (33,398 sales).
For foreigners, Portuguese property is astonishingly cheap. Indeed, you could expect real estate prices to be expensive in a region of such beauty, located a couple of hours away from London or Paris by plane, right? But that’s not the case at all.
While property prices in Paris, and in London, are mostly comprised between €10,000/m2 and €15,000/m2, the Algarve remains very inexpensive for foreign buyers, around €2,000/m2.
Why do we talk about prices in France and in the UK? Well, because the French and the British are the most important nationalities of foreign buyers, both keen on the Algarve too, together with the Germans, the Americans, the Spanish, the Swedish, the Norwegians, the Danish, or the Swiss.
For more details, check our article about foreign buyers in the Algarve
The Algarve has consistently been the most popular region among foreign buyers and prices are fairly affordable. According to Idealista’s data, average property prices in the Algarve are below €3,000 per square meter:
- Albufeira €2,266/m2
- Faro €1,949/m2
- Lagos €2,672/m2
- Portimao €1,961/m2
- Silves €1,958/m2
- Tavira 2,159/m2
Also, the latest figures from Idealista show a year-on-year increase across the region of 7.3% to €2343/m2 in September 2020. So we can say that the real estate market is stable, and prices have kept growing since 2016 in a healthy manner: no house price boom, but a continued growth.
If you’re not clear on the geography, let’s take a second to look at a map of Algarve. As you can see, from West to East, we have:
Looking at individual areas on the Algarve, property prices in Faro town (its capital) saw an annual increase of 5% to €1949/m2. Prices in Loulé where the sophisticated town of Vilamoura is located saw increases of 12% to €2836/m2.
Prices in the port city of Portimao rose by 3.8% to €1961/m2; Tavira, a pretty town on The Algarve’s eastern coast, registered price increases of 7% to €2159/m2; in the lively resort town of Albufeira, prices went up by 2.7% to €2266/m2.
In Lagos, which includes the resort of Praia de Luz and Marina de Lagos in its municipality, prices averaged €2672/m2 in September 2020, a year-on-year increase of 2.7%. And in Lagoa, where the picturesque coastal town of Carvoeiro is located, prices increased by 5.2% to €2562/m2. The former Moorish enclave of Castro Marim registered the biggest annual increase of 18.4% to €1915/m2.
Portugal is seen as a fairly resilient property market, especially in areas such as The Algarve, which has seen consistent annual price rises and rising tourism figures. Over the next few months the region may see a slight adjustment in prices due to the pandemic, but it is expected that they will pick up fairly quickly in 2021.
Although there is concern about the impact that the pandemic will have on economic growth and the real estate sector, most forecaster concur that property will continue to be a good investment on the Algarve in the long run, especially for the buy-to-let investor. In the post-Covid world, more buyers will be looking to invest away from urban hubs, as space becomes a premium. The Algarve has one of the lowest population densities in Portugal, offers good quality housing with no over-supply and a high proportion of foreign residents.
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