Lisbon Real Estate: How And When To Buy Property In Lisbon

Lisbon Real Estate: How And When To Buy Property In Lisbon

Sky Bar at Tivoli Hotel in Lisbon – by Sky Bar at Tivoli Hotel – Uploaded by them

Currently, the Lisbon property market is increasing and therefore prices are also rising at rates never seen before. Builders and real estate companies are constructing new buildings, remodeling properties and the emergence of new companies in Portugal has brought the country out of the economic crisis.

The current demand for properties and accommodations in Lisbon is truly remarkable thanks to the stability of the Portuguese economy. This gives hope to many so that they can obtain their property or be able to rent in the real city, at least for a long period.

Is There A Real Estate Bubble In Lisbon?

Without making many calculations, it is remarkable that the Lisbon property market is in a bubble. Property prices have been rising steadily to values even above real market values, over the five years since the economy was established.

Previously, acquiring a property in Lisbon was common because these were cheaper than those in other European cities. But since tourism exploded in the capital city and became a commercial municipality, it has caused housing demand to outbid supply, and this causes a bubble in the market.

Is This A Good Time To Buy Property In Lisbon?

House in Lisbon with Azulejos – Flickr

Yes, Lisbon is now at an economically stable point and you can really make an investment in a property, but you have to be optimistic and very prudent.

Thanks to the boom in the market right now, buying a property is really a good investment. In fact, you can buy an old apartment and remodel it for sale or rent. You can also make a bigger investment by buying a home in exclusive locations in the city that maintain a good quality-price ratio.

However, as we mentioned, it is necessary to be prudent and know how to choose which sector to invest in, because independently of that, the market is expensive.

Is It Better To Rent A Property?

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If you are only thinking of going and spending a few days of vacation, it may be better to rent. Buying a property just to stay for a few days is not worth it and is risky because you might not get a reasonable profit or recover the investment you make if you are going to resell after a short time. But if you are thinking of going for a longer period, you can opt for a mortgage to later buy a house in Lisbon, because prices will continue to rise.

But whether you’ve decided to rent or buy, you need to consider very carefully the location and type of property you want. Rentals tend to be more flexible, although in tourist areas they tend to have high costs. If you’re looking to rent a property it’s best to avoid the tourist areas unless you want to and look for something more central that allows you to save a little.

Another important fact is that Lisbon interest rates have remained low, so it may be better and cheaper to buy a property by paying monthly installments than to pay the monthly rent.

People who are currently buying property in Portugal know that prices are rising steadily because the economy is stabilizing more and more, however, prices are still relatively low even after the crisis that the country was going through.

In January 2016, there is an estimate that property prices increased by 3.66% year-on-year, allowing one square meter to cost 1,047 Euros.

Can Foreigners Buy A Property In Lisbon?

Image by LauraRinke from Pixabay

Absolutely! In Portugal, there are no restrictions for foreigners who want to buy a property in Lisbon, or somewhere else in the country.

In addition, the purchase of a property with a minimum value of 500,000 €, can give a benefit to the foreigner by granting him a golden Portuguese visa which gives him the right to be resident in Portugal automatically. 

For some exceptions, you may need a Personal Tax Number (Taxpayer’s Tax Number), which you can apply for at a tax office, but if you have a national bank account or choose to open one, this number will be assigned to you automatically.

However, it is also not necessary to open the bank account; you can transfer the money directly and make other payments by installments while the process of buying the property takes place.

What Are The Best Areas To Buy Property In Lisbon?

Lisbon, sourced from wikimedia

In Lisbon, there are areas where it may be more feasible to buy a property, currently these are: Chiado; Príncipe Real; Lapa and Avenida da Liberdade.

These are the best areas to buy a property currently in Lisbon, but the problem is that with high demand, prices keep rising and it can be difficult to find a good supply. 

Other areas to which investors are turning to buy properties are Santos; Intendente and Mouraria.

How Are Housing Prices In Lisbon Today?

We know that property prices, whether houses or apartments are steadily rising in Lisbon. In fact, it is stipulated that in the last two years, property prices have increased by 25%.

Currently, the average price of a square meter for a property within the city of Lisbon is €3,500, while properties on the outskirts of the city are priced at €2,000 per square meter.

Consult Prices of Properties in Portugal

To check property prices in Lisbon, or in other cities in Portugal, you can use a tool developed by the INE (National Statistics Institute), which allows you to review real estate prices in the main cities of the country. Although the site is in Portuguese it is not so difficult to navigate through it.

Is It Difficult To Rent Property in Lisbon?

Renting a property in Lisbon at an affordable price is not an easy task. As market prices have remained steadily rising and most rental property owners set short-term rental conditions, finding an apartment in the capital city is really complicated.

But if money isn’t a problem for you, then it won’t be so difficult for you to get a property to rent. In the city, you can find one-bedroom apartments (T1), two-bedroom apartments (T2), or up to three bedrooms (T3).

If you’re looking for something bigger to rent, then it’s best to look for options on the outskirts of town.

Real Estate Alternatives To Downtown Lisbon

Lisbon roads, sourced from Pixabey

If you are looking for properties that are not in the center of the city, then you can locate in the following alternatives:

Properties in Cascais

Cascais – by Alain Rouiller – Wikimedia Commons

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Cascais is one of the main areas where investors can go and look for property in Lisbon. This area is not overpopulated as the city center and is quite quiet. In addition, people from other countries have come to invest in this area; Turks, British, South Africans, etc. 

Several of the reasons why Cascais is one of the best areas to invest in a property in Lisbon are: 

• It is 30 kilometers from the coast.
• It has one of the highest education rates in Portugal.
• There are several resorts and golf courses in the vicinity.
• It has excellent private schools.
• There are companies of very good ranking at the national level.

Properties in Estoril

Estoril, sourced from wikimedia

Next to Cascais, surrounding the west coast of Lisbon is Estoril. A city that for a couple of years has been attracting the attention of local and foreign investors. This city offers a fairly safe environment, good transport systems, infrastructure and above all luxury properties. Estoril is also a very good option for investing in properties today.

Besides Estoril and Cascais, there are also other options far from the capital city: Amadora, Almada, Marvila, and Ameixoeira.

You can also find properties in Lisbon through the following websites: Remax; Casa Sapo, 21st Century; Portugal Property; ERA and Engel & Volkers.

These are the best websites where you can locate different types of properties and choose the one that best suits your needs.

Why Are Properties In Lisbon So Expensive These Days?

From the point of view of some real estate companies and other experts in this market, the boom in property prices in Lisbon and throughout Portugal is due to the high demand for foreigners in the country.

As long as the demand for properties by local and foreign investors continues to rise, prices will continue to rise, whereas if you are starting to decline, property prices will also decline. This would happen because more of Lisbon’s current real estate market involves foreign investors than local Portuguese.

Prices are so high that not even the Portuguese themselves can invest in properties. They prefer to sell the properties that have to invest again in this market.

Build Your Own House in Lisbon

In case you can’t invest in a property in Lisbon, you can opt to build your own house. For this, you must buy land or lot with planning permission. If you wish to check the land use license, you can do so by contacting your local council.

You must then hire an architect and a construction company to carry out the design and construction. For this, you must have quotes from at least three insured and verifiable professionals and verify examples of work done previously. This is to ensure that the lowest offer may affect you in terms of value for money in the future.

If during construction there is any defect with your property, the builder will be responsible for the year it is building. In addition, structural defects that may occur in your property five years after the completion of the work will be under the responsibility of the builder and they must be responsible for it. It is therefore recommended that you keep a down payment report at your disposal that can prevent you from having any problems in advance.

Selling A Property In Lisbon

If you are the current owner of a property in Lisbon, or in Portugal, you must include in your calculations the capital gains tax. If you are residing in the city, you will only pay capital gains tax over 50% of your profits.

However, you can reduce that percentage if you made an improvement in the property during the 5 years prior to the sale. This tax will depend on your tax situation, as in Portugal, this is calculated on the general income tax.

On the other hand, if you do not live officially in Lisbon or Portugal, you only have to pay a fixed rate of 28% on capital gains. 

When selling a property in Lisbon you should also be aware of the costs of real estate agents who may take a certain percentage of your net profits. In Portugal, these agents may charge between 3%-5% (23% above Value Added Tax) of the value of the property.

Advice For Foreigners

Before buying or selling a property in Lisbon, you should be aware that properties are subject to up and down movements. It is therefore advisable to investigate well the current situation of the real estate market and the local interest rates that are being handled for international mortgages.

You can also check the testimonies or references of other people who have bought or made an investment in Lisbon to be aware of what you may face; read about the frequent mistakes that some investors often have. Many people who once owned property in Lisbon decided to build their own houses, renovate houses or old buildings.

On the other hand, you can look for a professional advisor who can help you with every detail that a mortgage for foreigners, building permits, etc. may entail, especially if you do not speak Portuguese.  In some real estate agencies that provide advisory services, you may find one that speaks your language so that you can explain everything more clearly about what it takes to invest in a property in Lisbon. 

Advantages And Disadvantages Of Buying A House In Lisbon

Lisbon – Wikimedia Commons

For foreigners or expatriates what for a moment may seem like an advantage may end up being a disadvantage. Several surveys have shown that those who are not from Portugal and acquired long-term property, had problems with administrative procedures, had to pay high taxes and legal fees.

Others explain that they were unlucky enough not to get the right advice and ended up paying a high price. So it didn’t turn out very well for them to make the investment in a property in this city.

However, as we have already mentioned, to invest in a property in Lisbon today you have to be very wise and get the best possible advice so as not to fall into fraud and lose our money. But investing in Lisbon can definitely be a great investment worth making.