Foreign buyers retreat as Portugal property demand cools — prices remain high

Foreign demand for property Portugal falls for third year while prices stay elevated

Foreign demand for property Portugal has fallen for a third consecutive year, yet overseas buyers continue to pay far more than residents. The latest data from Portugal’s National Statistics Institute (INE) shows a clear shift in who is shaping the housing market: domestic buyers now account for the large majority of transactions, while international purchasers remain concentrated in premium sectors.

This matters if you are an investor, an expat or a lifestyle buyer. Our analysis below breaks down the numbers, explains the policy drivers behind the change, maps where foreign money is still active and outlines practical steps buyers should consider now.

Big picture: what the INE figures show

The headline numbers are unambiguous and worth storing in memory when you consider any move into Portuguese real estate.

• 8,471 homes were bought in 2025 by buyers with tax residence outside Portugal, a 13.3% decline on 2024. This is the third straight year of falling non-resident transactions.
• Buyers with tax residence in another EU country purchased 4,416 homes, down 9.6% year-on-year.
• Buyers resident outside the EU acquired 4,055 properties, a steeper drop of 17.1%.
• By contrast, domestic buyers with tax residence in Portugal bought 161,341 homes in 2025, up 10.1%, and accounting for 95% of all transactions — the highest share since 2019.

Those figures show two simultaneous trends: a cooling of cross-border demand and a strengthening of local buyer activity. For anyone tracking the Portuguese property market this is a structural shift, not a short blip.

Why foreign demand is slowing

Policy change is the clearest driver. Two measures stand out.

• The Golden Visa route tied to property investment ended at the end of 2023.
• The long-running Non-Habitual Resident (NHR) tax regime was revoked and replaced in 2024 with a tighter framework.

Those reforms removed or reduced fiscal and residency incentives that had attracted many international buyers over the previous decade. The result is predictable: when fiscal residency benefits and fast-track residency options are cut back, some buyers pause or reroute their capital.

I think it is important to be candid: policy is not the only factor. Macro influences such as higher global interest rates earlier in the decade, rising construction and renovation costs, and shifting lifestyle preferences after the pandemic have contributed. Still, the timing of the policy changes aligns closely with the decline in non-resident transactions, so regulators deserve much of the credit for the slowdown.

Overseas buyers still pay a premium — what the numbers say

Despite fewer transactions, non-resident buyers are not chasing bargain-basement housing. They remain concentrated in higher-value deals.

• The average transaction value for buyers with tax residence in Portugal was €234,120 in 2025.
• For buyers resident in the EU the average was €335,640, which is 43% higher than the domestic average.
• For buyers resident outside the EU the average was €470,277, roughly double the price paid by residents.

Those gaps tell us two things. First, foreign buyers generally have stronger purchasing power. Second, they tend to target higher-end housing stock: coastal villas, renovated historic properties, and new developments aimed at wealthy buyers.

From an investor perspective this split is important because it affects yield expectations and liquidity. Higher-priced properties often command premium rents in peak seasons, but they can be slower to sell in a market downturn. If you are buying at the top of the market you need to be comfortable with longer marketing times and a narrower pool of potential buyers.

Where overseas buyers are spending — regional patterns

Geography matters when you think about price, demand and liquidity.

In terms of non-resident transactions in 2025:

• Algarve accounted for 29.7% of non-resident purchases.
• North region took 20%, its highest share since 2019.
• Centre recorded 14.9%.
• Greater Lisbon represented 12.5%.

When we look at the total value of non-resident transactions the Algarve's dominance is even stronger:

• Algarve accounted for 42.4% of the total value invested by non-residents.
• Greater Lisbon accounted for 22.2% of the value.
• The North had 12.1% of the value.

That means the Algarve is still the primary magnet for international capital, especially for the higher-value purchases. Greater Lisbon has seen its share fall notably compared to 2024, while the Algarve and the North increased their shares.

This geographic split matters for buyers and investors because it signals where price resilience and demand for premium stock remain strongest. Coastal lifestyle assets in the Algarve still draw affluent foreign buyers, but inland and northern urban markets are seeing more interest from domestic buyers.

What this means for different kinds of buyers

I will be direct: the changed market favors some buyers and complicates life for others.

• For lifestyle buyers seeking coastal villas and second homes: the Algarve remains the safest bet for finding international-quality stock. You will still pay a premium, but fewer competing foreign buyers can ease bidding wars.
• For buy-to-let investors: domestic demand is strong. That affects rental markets in city locations where local buyers are now dominant. Expect more competition for mid-market urban stock, tighter rental yields in prime tourist areas, and a need to stress-test cash flows.
• For high-net-worth international investors: access to Portugal via property is now less about residency incentives and more about intrinsic asset value and lifestyle appeal. Expect concentrated deals in the Algarve and select Lisbon neighbourhoods.
• For emigrants returning or expats relocating: the increased share of domestic buyers suggests more on-the-ground activity and greater availability of services such as financing, conveyancing and renovation trades.

Practical considerations and steps for buyers and investors

If you are considering Portugal now, act on data, not sentiment. Here are practical steps based on the INE figures and market realities.

• Reassess the residency and tax case. The NHR regime was replaced and the Golden Visa is gone. Get local tax and immigration advice up front. Do not assume past incentives apply.
• Match strategy to region.