As someone with a strong business mind, I love to look at the numbers, they tell you a lot! So I've been studying the relevant statistics from the last few years, and would like to share my findings and conclusions with you.
Immigration Numbers & Trends
For us to understand the true growth of this trend, it's important to look at a few years back. Authorizations of residence include all types of visas, and it does not include the Schengen area (European Union) as there is free circulation of citizens. The graphic is pretty self-explanatory. It represents active residence permits in Portugal.
Between 2017 and 2019 immigration to Portugal more than quadrupled: In 2017 only 23 713 authorizations of residence were emitted; 2018 - 60 790 authorizations of residence emitted and 2019 - 111 504 authorizations of residence emitted.
Then comes the global COVID-19 pandemic, 2020 - 72 631 authorizations of residence emitted - the number does go about 35% down compared to the previous year, but given there is a raging pandemic it is still a very high number.
I am very curious to see the numbers from 2021, I'm counting on them being higher than 2020 but because SEF had a few strikes and a lot of delays I'm not sure what the figure will be. I will either update this article or create a new one going over the 2021 statistics in detail once they are released.
I believe the immigration trend is obvious, and will keep growing especially in 2022, as soon as people start to feel comfortable making big moves again - the number might even go over by 2019.
The Pandemic has had a secondary effect of a lot of people realizing they wanted better living conditions and for their money to go further, which generates a trend of immigration from wealthy countries to countries with lower cost of life but better quality of life - of which Portugal is a great applicant !
I believe this immigration trend is strongly related to the growing prices and transactions on the real estate market and that's why I wanted to show it first, so you can compare it to what is happening with the real estate market.
Real Estate
Doing a longer analysis of the growth of the Portuguese Real estate market is also very obvious, 15 years ago you would buy a typical building in Porto for 70-100k, nowadays, the exact same building will cost you 300-500k. Here's a graphic that shows the country wide price variation on residential real estate, over the last 30 years - it's very self explanatory.
Prices have been steadily rising since after the last market crash (2013), Locations like Algarve, Porto & Lisbon, with the higher touristic interest, show the biggest growth, so I find it important to look at cities individually. The trends and prices can be quite different, as you can observe in the graphic below:
This shows the prices per square meter of 7 Portuguese cities with more than 100k inhabitants, as you can see Lisbon stands in a whole different league, however it has also reached a plateau where the prices can not sustainably keep rising.
Porto shows one of the biggest growths and still has the potential to keep rising as the city gets more demand and popularity. Although Lisbon is the capital it is already in pair with other equivalent EU cities while Porto still has some room for growth as it is still affordable in comparison.
The medium size cities have, in my opinion, the biggest growth potential and therefore make amazing long term investment opportunities.
Corroborating this trends, the number of transactions and amount of transactions in the Portuguese real estate market show that, even though we had a raging pandemic, the market did not go down:
2019 - 60 998 real estate transactions totaling 12 700 Million (208k average transaction)
2020 - 122 791 real estate transactions totaling 28 200 Million (230k average transaction)
2021
1st half - 96 612 real estate transactions totaling 15 500 Million (160k average transaction)
33 000 Million total value of purchases (number of transactions not yet released)
I do believe the second half of 2021 will have a lower number of transactions of higher value, bringing the average transaction value up. Specially due to the changes in the Golden Visa program that lead to a lot of people submitting their application and buying high value property before the year ended.
Mortgages
A lot of Portuguese people took the opportunity of the pandemic, as sellers were taking lower offers, to buy homes and ask for loans, in fact the number of mortgages went up and the last trimester of 2020 has the one of the highest amount of housing loans since 2016.
This is due also to the significant reduction in spreads and taxes that also took place in 2020.
The numbers of mortgages in 2021 remained very high, and the spreads low, as you can observe below.
Banks are already starting to rise the interest rates in loans, and likely these numbers are going to start to go down in 2022, but I don't predict a very significant drop.
Conclusions
Foreign interest and immigration to Portugal will keep rising, and with it the prices of Real Estate, the trend will be to match equivalent EU cities.
Lisbon is already at a high plateau when it comes to prices, and it's unlikely to show a significant growth in the next few years.
Porto still has room for growth and the trend is for prices to keep rising in the next few years as it is still quite affordable in comparison to equivalent cities.
Other medium cities present great long term investment opportunities as the prices still have a lot of room to grow as the cities surely will.
The new Golden Visa program is diverting Golden Visa seekers from the big cities and orienting them towards low density areas, this will likely push away some investors but given the growing immigration trend I believe it will be effective to an extent - there are great investment opportunities in medium & smaller cities, most investors just don't know about them.
There is still a lot of interest in Portugal inside the EU, and EU citizens do not need visas or have any buying restrictions. D7 visas, D2 visas and all the other visas also don't set any limitations to areas or amounts of purchases, so in truth I do not believe the Golden Visa policy change will have a big impact on the real estate market trends. It will however have some significance in Lisbon, Porto and Algarve as the main investor hotspots.
By Ana Caramujo
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