How to buy a house during the housing crisis in Portugal?

Access to housing in Portugal, just like in Europe and the USA, is becoming increasingly difficult. Families are facing high housing prices and elevated mortgage interest rates. Additionally, their purchasing power is still constrained by inflation. All these factors have held back housing sales over the past year. However, real estate experts surveyed by Bloomberg believe there are alternative solutions worth considering for those looking to buy a home or invest in real estate. Let's find out what these solutions are.

Purchase of a land plot for building a house

Considering that housing prices in Portugal and the USA are rising much faster than salaries, it is becoming increasingly difficult to buy ready-made housing. Therefore, it is especially important to consider another option: purchasing a plot of land for building a house, specialists note. There are many plots available outside major cities at more attractive prices, which also means paying lower taxes when transferring ownership (Inmozport). Additionally, the construction of the house can be carried out by you and your family with the involvement of a contractor, step by step, depending on your available savings.

In addition, there is a mortgage loan for construction, which allows you to start paying interest on the loan during the construction of the property (meaning you only have periods for interest repayment). This type of loan can also offer longer terms, which helps to reduce monthly payments on the housing loan (but be careful, you may end up paying more in interest).

However, there are also some drawbacks. Of course, you will have to deal with the necessary bureaucracy (for example, slow licensing processes), and you will need to have your own funds to obtain a mortgage for construction (banks in Portugal finance no more than 90% of the total cost). Additionally, the loan capital is disbursed in installments as the construction progresses and a bank expert visits the site.

Buying a house for rental purposes

Some people decide to buy property to rent it out later. In Portugal, the return on investment in this business is increasing, but the risks are also rising, as indicated by a study from idealista.

Get the support of your parents.

For those who really want to buy a house but currently don't have enough funds to cover all the associated costs (such as property taxes and other fees, closing costs, down payment for a mortgage, etc.), family support may be needed. If your parents have savings that they won't need, they can donate that money to help you purchase a home. The good news is that monetary gifts from parents to children do not need to be reported on tax returns.

Restoration and expansion of the family home

Another way to have your own space without living far from your family is to carry out expansion work on your parents' house, for example. This way, you create your own space, save money, and avoid the need to take out a large mortgage. However, of course, you need to have healthy family relationships to start a home renovation project, as well as get your parents' consent. Additionally, make sure to find out what licenses are required for this.

Buying a house in a cheaper area

If you primarily work from home or are considering a job change, this advice is for you. Of course, land prices for purchase are higher near major cities like Lisbon and Porto, as well as in the capitals of Portuguese regions. However, if we head inland, we will find the 10 cheapest cities for buying housing. There, you can purchase your home and take out a mortgage with much less effort. However, all of this will require a change in your life, as you may find yourself far from work, family, and friends, as well as from the cultural dynamics and services that larger cities offer.