Who am I to tell you this? No one, just yet another expat spending a few years in Portugal. However, I’ve seen more than 100+ houses for sale, inspected them, attempted to buy a home and decided that it’s too dangerous. Let me explain.
My family and I arrived in Lisbon in 2020 and for many reasons, we’ve loved Portugal. We quickly found some areas, a school for our kids etc – but housing kept being an area where we simply couldn’t make progress.
The Portuguese construction industry has had great problems all the way back to the former financial crisis in 2008. The industry has never truly recovered and yet the demand is exploding. In Denmark where I am from the cost per hour of labour is probably 2-3x higher than in Portugal, yet the houses (building a new family house) is 2-3x more expensive in Portugal for similar specs.
So why is the demand so great?
Portugal has been in a crisis for a long time and truly tried to get out of it. The solution they thought would be to sell passports to anyone buying a property (Golden Visa) and offer a tax incentive to everyone but the locals.
So wealthy and semi-wealthy people have really started the race.
In 2018, you could easily find a T1 (1 bedroom) in Lisbon for under €100.000. Now it’s not unrealistic that the price is €350.000-€500.000.
The price has literally exploded. There is no longer such a thing as a price per sq. meter. The price is simply whatever the foreigner is willing to pay. SOLD to the highest bidder!
But hey! It’s still dirt cheap compared to New York!
If just the price was the only thing I could complain about, I would never have written this blog post.
Portugal has some of the proudest and patriotic people and this can be confusing:
But it’s simply not true. Let’s start from the beginning:
- Portugal does not know what isolation is, if they say they do ask them what Rockwoll is…
- Because of the cold air from the Atlantic Ocean and the geography of Portugal, it’s simply hard to avoid heavy mould problems when you are not heating your houses. So mould is a real problem!
- The windows in Portugal are not to keep the heating in, but simply just to stop the wind.. I’m not joking… If you want real windows, you must import Velux or similar high-spec windows.
- Lisbon (where we have done our research) is sitting on an earthquake zone. The history is tragic. There hasn’t been a major earthquake for many years. But with earthquakes, we are sure they will be back one day. Unfortunately, Portugal has some of the worst building quality I have seen. Insane settlement cracks and very little thought is put into earthquake proofing buildings.
I would be very scared of what this would mean – yet NO ONE talks about this… Hence why I had to write this blog post!
- Ventilation isn’t often well thought out either, so there is a lot of humidity in the air inside. This means you do need to invest in a few larger dehumidifiers from retailers like Worten or Leyroy Merlin.
Alright, now I’m sure I’ve found the perfect property… what is it that I still don’t know?
Portugal has a very high transfer tax that is due when you buy the property. This is 0-6%.
If you ever want to sell your property again, the real estate agent’s commission is 6-7% and you won’t get anything back on the property tax, so you have to sell your property a good bit more expensive than you bought it to gain a profit.
There is NO public record of what the property has been sold for so you have very poor negotiation power to get yourself a good price.
We’ve seen properties for €600k where the bank comes out and values the property to €350k (the real value in their eyes) and says you can have an 80% mortgage of the €350k. So you just need to get €320k in deposit + the 6% (€36k) in property tax.
When all of that is said, then I hope you enjoy Portugal. This does not turn us off. Just please keep the above in mind.