Buying or renting a house in Portugal in 2023: which is better?

Thinking of moving to Portugal in 2023? But which is better: buying or renting a house in Portugal? This is a question that many people ask themselves when moving abroad, for example. And the answer is far from simple, it is ambiguous and several factors need to be taken into account when making a decision. One thing is for sure: housing prices have risen significantly in recent times (although reductions are possible), as well as the rents that owners demand from tenants. In this article, we will try to help you answer this question depending on your situation with the help of Deco.

Buying a house in Portugal: what do I need to know and consider?

Buying a house in Portugal is a dream for many people, but it is far from an easy process. The main reason is that you will most likely have to apply for a mortgage, which entails a lengthy and bureaucratic process that requires a solid financial cushion to cover the costs. But the most important benefit of buying a house is the ability to pay off the property, which, at the end of the contract, will be yours.

The first thing to consider is your financial situation. Choosing to buy a house in Portugal in 2023 means assessing your income: is it guaranteed and stable, or does it fluctuate a lot? You need to have a clear answer because mortgage payments cannot be left out.

Then calculate your own effort share and only apply to the purchase if it does not exceed 35%.

Once this decision is made, if you are given the green light, you can safely proceed, but banks will only provide you with 90% of the value of the house, some even less, as low as 80%, so you will need a down payment to complete the transaction. In the case of foreigners living in Portugal, this financing percentage can be even lower. And the down payment is not the only amount you need to have available for the purchase. You'll also need to budget for the amount for decorating and registering the house, government tax and utility bills.

Renting a house in Portugal: what do I need to know and consider?

Especially for young people who do not yet have enough money for a down payment and related costs, renting a house can be a solution. Consumers who do not need expenses other than rent can find their way out here - it is also a good choice for those who do not want to commit to living in Portugal long-term.

If your professional life involves constant change, including geographic change, renting may be a better solution, as the process of moving out of one home and into another is much easier than buying and selling.

Although renting seems more advantageous at first glance, you should realize that as a renter, you will be dependent on the owners' willingness to renew your contract or not. In addition, you will be restricted by the owners' permission to carry out works and repairs in the house, which may end up meaning the same costs as buying a house.

From a financial point of view, renting will require analyzing your financial situation, on the one hand, because it usually requires making several monthly rent payments in advance as a guarantee of a successful contract. On the other hand, on average, because of the high demand, it requires a significant financial impact, although it is less than the capital invested in buying a house.

Buying or renting a house in Portugal: conclusions

Both buying and renting a house have their advantages and disadvantages. Your decision should always involve a careful analysis of your current and medium-term financial situation, as well as an understanding of the obligations associated with each option.

Ultimately, the decision to buy or rent a house in Portugal depends on your personal situation and priorities. If you plan to stay in Portugal for a long time and have the financial means to purchase property, buying a house can be a good investment. However, if you value flexibility and do not want to be tied to a specific location or property, renting may be a more suitable option.