Foreigners are looking for housing less due to the end of golden visas and RNH.

In recent months, there have been significant changes in tax incentives for foreign citizens in Portugal. In particular, the golden visa program for real estate investment ended in October, and the previous conditions for Residents of Unusual Status (RNH) will no longer be in effect starting in 2024. The conclusion of these tax benefits coincided with a decrease in international demand for housing in Portugal, especially from American investors, by the end of 2023. At the same time, there was a decline in interest from foreign citizens in renting housing in the country, according to data from the portal idealista/data. Nevertheless, even with the reduced appeal for foreign buyers, foreigners still make up over 22% of the total number of people looking for housing to buy or rent in Portugal.

As of October 7, when the Mais Habitação initiative came into effect, the golden visa program for real estate investment has officially ended. Additionally, under the 2024 Budget, the regime for Residents of Unusual Status has been discontinued, leaving only a transitional period for those planning to move to Portugal in 2023, which can be confirmed by existing work or rental contracts. In place of the RNH regime, a new tax incentive focused on research and innovation has been introduced, which, however, is more stringent, and it is still unclear who exactly will be able to take advantage of it, despite the program already being launched.

Do these changes affect the direction of international demand for housing in Portugal? According to data from idealista/data, the end of golden visas and the cessation of the RNH regime, among other factors, have indeed influenced the interest of foreign citizens in housing in Portugal by the end of 2023. In particular, the share of inquiries for property purchases by foreigners accounted for 23.1% of the total in the last quarter of 2023, down from 24.3% in the previous quarter (-1.2 percentage points). Compared to last year, there is also a decline in interest in 11 major cities.

As for rentals, foreigners ended the year accounting for 22.2% of the total number of inquiries, which is the lowest figure since mid-2021. This is down from the previous quarter (23.6%) and compared to the same period last year (29.7%). It is important to note that foreign interest in the rental market has decreased across all administrative centers compared to the previous year.

Despite the data indicating that the end of these tax incentives may have reduced international interest in the Portuguese housing market, foreigners still account for over 22% of the total inquiries for both purchases and rentals. It is also important to remember that, in addition to tax privileges, people from other countries are influenced by factors such asmild climate,high standard of living,securityandquality medical and educational servicesAdditionally, the program for digital nomads also attracts foreigners who want to change their lives.

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A decrease in interest from foreign buyers in 15 major cities

Requests for home purchases by foreigners have fluctuated over the past five years but have always remained above 20% of the total. The highest interest from foreigners in real estate was recorded in 2019, when they accounted for more than 25% of the total volume. However, with the onset of the pandemic in 2020, interest from foreign citizens in housing significantly decreased due to travel restrictions.

In the second half of 2021 and throughout 2022, foreigners began to increase their share in the market again as Portuguese families faced pressure from inflation and rising interest rates, while housing prices continued to rise. In 2023, fluctuations in demand from foreigners were observed, with a decrease to 23.1% of the total number of inquiries in December.

Out of 20 administrative centers in the country, interest from foreigners in purchasing real estate increased in 5 of them compared to last year, remained at the same level in four cities, and decreased in 11 cities. The most noticeable growth in demand was observed inThe headlight,Ponta Delgada,Porto Alegre,BeigeandBranyansebetween December 2022 and December 2023. At the same time inPortoit has remained virtually stable, accounting for 21% of the total number of requests, while inLisbondecreased to 18.9%. The largest decrease was recorded inVilla Reale(-4 percentage points).

Additionally, compared to the previous quarter, interest from foreign buyers in real estate at the end of 2023 decreased by 1.2 percentage points nationwide, which occurred against the backdrop of the implementation of the program to terminate golden visas. The most significant decline was observed inVisa,CoimbraandViana do Castelo.

By the end of 2023, in four cities, at least 30% of individuals looking for housing to buy were foreigners. In particular, this is the case withFunchal(45.3%),Ponta Delgada(40.1%),The headlight(32.7%) andViana do CasteloHoweverEvora,CoimbraandRunningwere the least popular among foreigners.

A decline in interest from Americans after the completion of the golden visa program.

Among foreign citizens seeking housing in Portugal, the highest interest over the past five years has been shown by the French, who have consistently held the top position. Only from the summer of 2022 to the summer of 2023 did they get surpassed by Americans. However, in the last quarter of 2023, after the official end of the golden visa program, American interest in purchasing property decreased from 12.4% in the summer to 11.4% by the end of the year, allowing the French to reclaim the top spot. There is also a decline in interest from Brazilians, who have dropped out of the top 5 after a long presence on the list.

Now the French are back in first place, with the British in second, followed by the Americans, Germans, and Swiss, according to the provided data.

A decrease in interest from foreign citizens in renting housing at the end of 2023.

After fluctuations in the demand for rental housing from 2019 to early 2021, the share of foreign citizens in rental inquiries steadily increased, reaching 30% of the total in the second quarter of 2022. This was due to the easing of travel restrictions in the post-pandemic period. However, after that, the demand for rentals decreased, and by the end of 2023, it accounted for only 22.2% of the total inquiries.

This decline in international interest in renting housing in Portugal was felt in all administrative centers at the end of 2023 compared to the same period last year. The most significant decrease was observed inVilla Reale(-12.1 percentage points), the lowest inLisbon(-1.5 percentage points), according to the same data from idealista/data. A decline in interest was also observed on a quarterly basis in 14 major cities, includingPortoandLisbon.

Funchal,BrillianceandViana do Castelothe most foreigners were attracted for renting housing at the end of last year, whileEvora,SantarenandPorto Alegreturned out to be the least attractive for such requests.

Brazil is a leading country in rental searches.

For the past five years, Brazil has remained the main source of foreign rental inquiries, finishing 2023 with a share of 24.2%. This is because many Brazilians initially prefer to rent housing in Portugal to adapt to the new conditions and cultural environment, as analyzed in one of the idealista/news articles. Once they get used to the country, many decide to buy property or engage in its renovation.

The United States ranks second in the number of rental requests in Portugal (10.4% of the total), followed bySpain(8.2%)Germany (6.5%) and United KingdomMost foreign citizens looking for rental housing are digital nomads or retirees who want to live in a climate-friendly environment while enjoying a good quality of life.