Loss in Portuguese home sales -20 % in the first half of the year due to the end of the golden visa

Home sales in Portugal fell in the first half of this year due to rising interest rates and the government's decision to end benefits for some foreign buyers, according to real estate services provider Jones Lang LaSalle.

Home sales fell 22% to 68,000 units in the first half of this year compared to the same period last year, JLL said. Some 168,000 properties were sold in Portugal in 2022, the highest sales volume in history.

Nonetheless, real estate prices are not expected to fall anytime soon as demand for housing continues to exceed supply, JLL noted.

"The structural supply deficit continues," said Joana Fonseca, head of research at JLL, at a presentation in Lisbon. "The pace of new residential units coming onto the market continues to be well below the volume of demand.

Earlier this year, Portuguese Prime Minister Antonio Costa announced the closure of a "golden visa" program to combat speculation in the real estate market and tackle the housing crisis in cities including Lisbon, where property prices have tripled since 2015. His Socialist government will also end the so-called "permanent resident regime" next year, which offers reduced income tax rates for 10 years for qualified people who have moved to the country.

The two programs helped revive Portugal's stewing real estate market after 2011, when the country was struggling to emerge from a deep recession. While these programs still attract foreign property buyers, they now account for only a small share of total real estate transactions in Portugal.