Portugal is not only a highly livable country but also offers simple pathways to obtain residency status. Furthermore, over the past year, property prices in Portugal have risen significantly, providing many investors with substantial returns. So, what is the future trend for the Portuguese real estate market?
The Portuguese Real Estate Market in 2019
After experiencing several years of unchecked growth, the Portuguese real estate market became calmer in 2019. However, calm does not mean stagnation. Sales have remained stable, and the relationship between supply and demand has become more balanced. Although the market appears very calm, relevant authorities predict that Portuguese property prices will still rise by about 4% in 2020. While many new properties will enter the market in 2020, which helps to temper the momentum of long-term rapid growth, this is also very good news for buyers who have been looking for suitable housing, as it will help them find more quality properties.
Rapid Rise in Rental Prices
In 2019, demand in the Portuguese rental market showed no signs of slowing down, with rents rising by another 3.4% year-on-year. In the capital city of Lisbon, rental prices rose even faster, with a cumulative increase of 4.3%. For investors, this is exciting news, as they can still profit from the rental market. Generally speaking, the healthy calm of the Portuguese real estate market is reflected in the country's overall economic situation, and consumer confidence remains relatively stable.
Is the Portuguese Real Estate Market Still Worth Investing in for the New Year?
The Portuguese authorities will not stop their measures to stimulate the real estate market. They have not only launched programs involving overseas buyers, such as the Portugal Golden Residence Visa, but have also introduced a series of protective laws regarding rents and Airbnb rentals. In addition, there were quite a few measures targeting real estate over the past year, such as a one-time tax on properties priced over 570,000 euros, and an additional 7.5% tax that may be levied on properties exceeding 1 million euros.
Portugal is considering new capital gains tax incentives for owners of long-term rental properties, with taxes based on the official recorded value or the transaction value of the property, whichever is higher. Near the thresholds for these taxes, real estate prices may see some adjustments. It is speculated that the tax mechanism is designed to minimize tax avoidance! In the long run, the Portuguese authorities also plan to exempt rental properties from capital gains tax. For investors, this is clearly good news.
With the arrival of the holiday season, the Portuguese real estate market continues to move in a positive direction. To give just one example, hotels in Porto and the northern part of the country are "almost full" for the new year, and the stability and optimism in Portugal are encouraging. Therefore, in the new year, Portugal remains a country where the real estate market is well worth investing in.
Investment involves risks, the above information is for reference only