Market Report February 2024
We are thrilled to share our latest Market Report with you.
In the report you will find an overview of the market...looking back at 2023 and ahead to 2024 (and beyond!), providing our analysis, views and on-the-ground insights.
Together with our local expertise, the backing of the Savills Global Network and our team of over 30 top multinational sales and marketing professionals, we pride ourselves on being your go-to agent for the most up-to-date and insightful industry knowledge.
We hope you enjoy our latest Market Report and invite you to discuss any of the covered topics with our Special Agents.
In this article, we've highlighted the introductory and concluding paragraphs, for the full report please click here.
2023 in numbers
2023 was the best tourist year ever in Portugal, with more than 30 million visitors, 77 million overnight stays and revenue of around €25 billion according to the Secretary of State for Tourism, Commerce and Services, Nuno Fazenda, during a public session of Turismo de Portugal, in Lisbon. This represents a growth of 37% compared to 2019 and 18.5% compared to 2022. Nuno Fazenda also highlighted that he believes that tourism will “grow further in 2024”. This is great news for the area and great news for the real estate sector. All new property purchases predominantly begin with a holiday to the region.
Our focus at QP Savills has always been the high end of the market which is concentrated in and around the Quinta do Lago and Vale do Lobo areas and in recent years the greater Central Algarve.
2023 started well. We quickly saw that demand continued to be strong and our biggest challenge was lack of stock. This trend was evident in 2021 and 2022 and continued into 2023, across the whole of the Algarve coast.
The persistence of an imbalance between demand and supply is considered by sector experts to be the main reason why house prices will not undergo corrections in 2024. “House prices have been rising for more than ten years and this is expected to continue, albeit at a slower rate, in 2024”, states Patrícia Barão, head of residential at JLL. The same opinion is shared by Hugo Santos Ferreira, president of the Portuguese Association of Real Estate Developers and Investors (APPII). “House prices are not expected to fall” in 2024.
The same upward movement is mirrored by Eurostat data, which indicates that, between 2010 and the second quarter of 2023, in Portugal, house prices rose by 93% (around 5.4% per year) and rents increased by 33% (2.3% per year). These numbers place Portugal in seventh place among the Eurozone countries with the biggest increase in house prices since 2010 and in tenth place in the ranking of Eurozone countries with the biggest increase in income.
The general lack of stock over recent years is one of the contributing factors to the continued price increases, but we did perform more valuations for property owners in 2023 and listed more properties than in recent years. The fact that property values can be quite eye-watering has proven too difficult for many property owners to ignore and too tempting. This has resulted in more properties coming onto the market but listed by vendors who do not need to sell, and will only sell if the offer is simply too good to turn down. More choice for buyers, but at a price.
The result being that prices indeed continued on their upward trajectory albeit, the speed of travel slowed slightly. The war in Ukraine and then the Middle East, coupled with the discussed end of the Golden Visa scheme and Non-Habitual Tax Residency scheme, have possibly resulted in a little nervousness. In Q4 our sales teams reported that buyers were a little less bullish.
At QP Savills we have observed from what was once a strong vendors’ market to what now appears to be a more level playing field. In the aftermath of COVID, we experienced a period of heightened urgency among buyers, creating a sellers’ market where properties were in high demand. However, recently buyers seem to be adopting a more deliberate approach, taking their time in making property-related decisions.
One key factor influencing this change is the slightly increased availability of property stock. The increased number of options has alleviated the pressure on buyers to act hastily, allowing them to thoroughly evaluate their choices before committing. While we currently find ourselves in this more balanced market, we anticipate that the real estate landscape will remain robust. The level of property stock and the more measured pace of decision-making do not signify a weakening market but rather a more healthy and sustainable one.
Portugal’s popularity undeniably is growing worldwide, with peak interest coming from Canada and the USA, to Dubai and Australia. Almost 140,000 visitors from the United States brought the number of foreign tourists in Portugal to a record high for the month of November 2023, according to the National Statistics Institute (INE).
Spaniards and Britons came second and third, with 131,000 and 124,000 visitors respectively, the INE said in its monthly report. More than 1.1 million foreigners travelled to Portugal in November.
It’s not just a sought-after destination for holiday homes; it has also become a preferred choice for digital nomads, couples of all ages, and young families looking to make it their permanent residence and possibly working for foreign companies while being based in the sunny Algarve.
And why not? The region’s appeal lies in its safe environment, excellent and increasing schooling options, and a healthcare system that rivals the best in Europe. The Algarve feels secure and far removed from issues in eastern Europe and the Middle East. Many new people are investing in property in the region and so many of our existing clients want to continue their love affair with the area, either upgrading or downsizing and this reluctance to part with property completely in the region contributes to the growing demand.
Looking forward, it is conceivable that we may continue in this equilibrium or possibly witness a return to a vendors’ market. Crucially, our clientele comprises sellers who are not in a rush to sell their properties and are steadfast in their pricing stance. The enduring interest from buyers in Portugal shows no indication of diminishing in fact quite the reverse, and developers are displaying significant confidence in the market. This combination of favourable factors places us in a strong position to navigate any potential market fluctuations, and we eagerly anticipate a successful 2024.
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