Home prices are at their peak, and the Portuguese are the largest buyers.

The housing crisis in Portugal has been a long-standing issue, but today it is in the spotlight after António Costa's government decided to intervene in the market with the "More Housing" package - which has sparked a lot of debate and is currently open for public discussion until tomorrow.

The shortage of housing supply for purchase is a structural problem that has led to a rise in housing prices in recent years, with a record annual increase of 12.6% recorded in 2022. However, both high prices and the current context, marked by high inflation and rising interest rates, did not prevent the sale of 167,900 residential units in 2022 - the largest number ever recorded by the National Institute of Statistics (INE), despite a slowdown at the end of the year.

It is the Portuguese who are responsible for the majority of real estate transactions made in 2022, although foreigners are becoming increasingly active in purchasing residential properties in Portugal (and are spending much more to make a deal). Their share of home purchases in Portugal has never been as high as it was last year.

Latest data from INE

Published on Wednesday, March 22, there is no room for doubt: despite all the economic and financial instability, the Portuguese continue to be the most active home buyers in our country, and it is the families residing in the national territory who were primarily responsible for the record sales in 2022.

In more detail, the Portuguese acquired 157,178 residential properties last year (93.6% of the total number of transactions), with operations totaling 28.2 billion euros (89% of the total value). In 2022, the highest number of homes was purchased by residents of the country in the Greater Lisbon, North, and Central regions, as the statistics show.

Foreigners are more active in the market (and they buy more expensive housing).

It is also true that foreigners were more active in the real estate market last year, starting to gain momentum compared to the Portuguese. While the number of transactions made by Portuguese increased by only 0.3% in 2022 compared to the previous year, transactions made by foreigners grew by 20.2% between these two points, reaching 10,722 residential properties - which accounts for 11.4% of the total sales, the highest value since the INE statistics began. Additionally, the sale price of properties sold by foreigners increased by 25% in just one year, reaching 3.6 billion euros.

This data indicates that foreigners tend to buy more expensive housing than Portuguese people, primarily seeking luxury homes. It is the buyers residing outside the European Union who purchase property in Portugal at higher prices, averaging €406,267—twice as much as what the Portuguese pay. They are followed by buyers living in the European Union, who spend an average of €279,063 on a home (+56% compared to the Portuguese).

This means that both Portuguese and foreign buyers contributed to the development of the real estate market in 2022, which reached historic sales. However, the data also indicates that the consequences of the war in Ukraine, rising interest rates, and inflation began to be felt at the end of the year, leading to a decrease in both the number of transactions and the value across all buyers' legal addresses (both national and foreign) - the most significant decline was observed among buyers from countries outside of Europe.

Every fourth house sold in the Algarve is purchased by foreigners.

Of the total number of transactions involving foreign buyers in 2022 - which amounts to 10,722 transactions - about 36.9% pertain to residential properties located in the Algarve. However, this was the lowest figure since the series began in 2019. The top three preferred regions for foreigners to purchase housing in Portugal conclude with the Lisbon Metropolitan Area, accounting for 20.1% of transactions, and the Center region (19.4%).

Thus, the Algarve residential real estate market attracted the largest amount of foreign capital - 44.9% of the 3.6 billion euros spent by foreign buyers residing outside the national territory. Following closely is the Lisbon Metropolitan Area (31.6%) and the Center (8.9%). INE data shows that the dynamics of foreigners in the Portuguese residential real estate market are uneven and vary significantly from region to region. It is in the Algarve that the activity of these buyers is felt the most.

Foreign buyers (both within and outside the EU) accounted for 26.2% of the 15,123 homes sold in the Algarve region in 2022 and 37.9% of the turnover of approximately 4.3 billion euros.

The autonomous regions of Madeira and the Azores also felt the impact of foreign buyers (although to a significantly lesser extent than the Algarve): in the Autonomous Region of the Azores, foreign buyers accounted for 7.0% of the total number of transactions in this region and 7.8% of the total transaction value in 2022; in the Autonomous Region of Madeira, the percentage of home purchases by foreign buyers residing outside the national territory was 8.8% by number and 14.8% by value.

The North is a region where the activity of foreign buyers is less noticeable in the overall balance, accounting for only 3% of the 47,303 home sales registered in 2022, and 3.6% of the 7.4 billion euros in turnover in the residential real estate market of the North.