Why foreign demand for Portugal property stayed high even as purchases slid

Foreign demand is holding up while purchases fall

Portugal property remains a headline for international buyers, even as completed purchases by non-residents keep falling. Our analysis of official and portal data shows a split: completed acquisitions dropped, but online interest from abroad stayed strong in early 2026 — a sign that Portugal is still seen as a safe place to buy and live during global turmoil.

The National Institute of Statistics reports that in 2025 non-residents, foreigners and Portuguese emigrants bought 8,471 homes, a 13.3% decline year-on-year. At the same time, portal data from idealista for the first quarter of 2026 shows high volumes of international visits to property listings in a number of Portuguese cities. That gap between expressed interest and closed deals is the central story for the Portugal real estate market today.

Why this matters for buyers and investors

We think the divergence between intent and transactions matters for two types of readers: international buyers who are watching entry points and investors looking for market signals. For buyers, strong search activity suggests supply choices and negotiation leverage can improve in some locations. For investors, falling sales volumes signal transitional policy risk and slower near-term capital flows, but the sustained demand data shows underlying appeal remains.

The policy shock: what changed and how it hit demand

Policy reforms from recent governments changed the rules for foreign buyers. The most consequential moves are:

• End of golden visas for real estate investment. This removed a widely used route to residency in Portugal.
• Replacement of the non-habitual resident (NHR) regime with a stricter version. The previous NHR provided tax incentives that encouraged wealthy retirees, remote workers and professionals to take up residency.
• A new immigration law under the AD government of Luís Montenegro is now in force.
• A revision of nationality law is under review at Belém by President António José Seguro.

These reforms explain much of the fall in completed transactions. When tax and residency incentives change, purchase decisions that depended on those incentives are often postponed or cancelled. That effect shows clearly in the 13.3% drop in non-resident purchases in 2025 reported by the National Institute of Statistics.

From an investor perspective, policy-driven demand contraction raises two consequences:

• Short-term transaction volumes and price momentum can cool, producing windows for negotiation.
• Regulatory uncertainty raises holding risk — buyers who expected tax or residency advantages may see returns reduced if rules remain tighter.

Those consequences are practical: check tax forecasts, obtain independent legal advice on residency and nationality risks, and model returns under the current, not the old, regimes.

City-level demand: where foreign search activity remains concentrated

The idealista Q1 2026 data shows that international interest varies widely between municipalities. Some smaller or island markets show very high shares of foreign views, while the main urban centres still attract significant attention.

Key figures from idealista/data:

• Funchal (Madeira): 30% of listing visits from abroad.
• Ponta Delgada (São Miguel, Azores): 27% of listing visits from abroad.
• Porto: 15% of listing visits from abroad.
• Lisbon: 13% of listing visits from abroad.
• Évora, Santarém, Beja and Coimbra: between 9% and 11% foreign share.

Cities where roughly one in five searches come from abroad include Viana do Castelo, Faro, Bragança and Castelo Branco (about 20% each).

These numbers tell two stories. First, islands and some coastal or touristic cities keep a very high proportion of international attention. Second, Portugal’s two largest urban markets still attract substantial foreign interest, but that interest is a smaller share of total demand than in some smaller municipalities.

For buyers this means where you look matters: if you want to compete with international buyers, Lisbon and Porto remain contested, but if you want a market with a larger share of foreigners per listing, Madeira and the Azores stand out.

Which nationalities are searching, and what that implies

Idealista’s Q1 2026 breakdown of where foreign visitors are located shows the US and UK as predominant sources of demand. Across the 20 major Portuguese cities analysed:

• The United States or the United Kingdom ranked first in 12 of the 20 cities (six cities each).
• The US led international visits in Ponta Delgada (35%), Aveiro (15%), Braga (14%), Lisbon (14%), Coimbra (14%) and Évora (14%).
• The UK led in Funchal, Faro, Castelo Branco, Setúbal, Beja and Santarém.
• France led in Viana do Castelo, Bragança, Guarda and Leiria.
• Spain was the top source for Porto and Portalegre.
• Switzerland accounted for the most visits in Viseu and Vila Real.

A final summary point from the portal data is that the top three nationalities make up more than a third of all foreign visits to homes for sale in these cities in Q1 2026.

Implications for sellers and agents:

• Listings aimed at US and UK buyers should highlight legal clarity on residency, lifestyle features for remote workers and access to international schooling or healthcare.
• In border or northern regions, Spanish buyers matter and price sensitivity may differ.

For investors, the nationality mix matters to rental demand assumptions, expected duration of stays and type of buyer (cash buyers vs mortgage-dependent purchasers).

How to read the gap between searches and purchases

Sustained online interest yet falling transactions is not unique to Portugal.