Real estate in Portugal is among the lowest-cost in Europe. In popular coastal areas, such as the Algarve, many buy property as an investment, either to rent out all the time or to rent out when the owner is not using it. If you plan to buy a property for personal use—especially if you plan to live in it full-time—it’s advisable to go in person to view a property before purchase.

The Algarve

Although on the Atlantic, the Algarve’s climate feels Mediterranean, and it has long been a favorite spot for European vacationers and second-home buyers. The region’s numerous golf courses mean there’s also good potential for year-round rental income.

Prices in the Algarve have fallen since the height of the second-home buying boom, but it’s not the cheapest area of Portugal. Compared to other parts of the country, the Algarve is relatively expensive, certainly in central coastal locations around Albufeira and Vilamoura. Some resorts have also lost much of their Portuguese character, so do plenty of investigation.

You’ll find better value—as well as less unsightly development—along the Algarve’s east coast around Tavira. Also look to the west around Lagos, which feels a lot more like a proper working town than a resort that depends solely on tourism.

Property Sample:

  • A two-bedroom apartment, with two bathrooms, balconies, and a private terrace with sea view, for sale in Tavira. On the second floor, this property is located 1 km from the Roman bridge in Tavira city center. Price: $153,900.
  • A one-bedroom penthouse apartment excellently located in Lagos city center, close to the Marina and all amenities. It consists of a living/dining room with access to the terrace overlooking the city. It has a large equipped kitchen, a bedroom, and a bathroom. Price: $178,500.
  • A two-bedroom apartment with sea views in Santa Maria, Tavira. The 710 square foot property includes built-in wardrobes, fully equipped kitchen, common room, a complete bathroom, and attic. Price: $107,900

The Alentejo

If beaches, olive groves, vineyards, castles, and gorgeous little frontier towns perched on wooded hilltops appeal, the Alentejo has a lot to offer. Covering more than 10,000 square miles of lower Portugal, the Alentejo spreads east from Lisbon and the Atlantic to the Spanish border.

Despite its glorious beaches, mass tourism has barely had an impact on the Alentejo. You’ll find good food (delicious roast suckling pig) and earthy red wines—often less than $10 a bottle in local restaurants. At chestnut fairs and country markets there’s an extravaganza of flowers, veggies, cheeses, olive oils, honey, live poultry, and bric-a-brac—the “marble town” of Estremoz has a great market.

The Alentejo’s two cities are Beja, in the south, and Evora, in the north. A UNESCO World Heritage site as well as a university city, Evora’s roots go deep. Preserving a Roman aqueduct, baths, and temple ruins, its overall feel is medieval and Moorish. Handsome houses with faded coats-of-arms. A leafy park with gazebos adorned with azulejos, Portugal’s iconic painted tiles.

Property Samples:

  • A two-bedroom home in Evora’s historic center, with 947 square feet of space. There is a balcony window in the living room and all the doors are sliding doors. Price: $147,714.
  • In Estremoz, two-bedroom apartments start at just $67,000.

The Silver Coast

Hemming central Portugal’s rugged coastline of cliffs, coves, and whitewashed windmills, the Atlantic beaches of Beira and Estramadura provinces are known as “the Silver Coast.” Slumbering inland are abbeys, pilgrim shrines, and ancient castle towns such as Tomar. Small villages come surrounded by terraced olive groves, citrus orchards, and vineyards.

Attractive seaside towns include Nazare and Sao Martinho. Nazare is both a summer resort of apartments, and a proper fishing town of narrow alleys and old houses. Fishwives in thick woolen skirts and socks gut small fish like sardines and horse mackerel right on the beach before hanging them out to dry on racks. Sao Martinho, a few miles south of Nazare, is almost enclosed in a cove. It has a shell-shaped beach and the promenade is lined with traditional cafés, bars, and seafood restaurants.

Property Samples:

  • A new two-bedroom villa in São Martinho do Porto is for sale. Located just a few minutes from the bay of São Martinho, the property consists of two bedrooms, a living room, balcony, entrance lobby, kitchen, two bathrooms, and a garage. Price: $146,500.
  • A one-bedroom apartment is available in Nazaré, one of the most popular seaside resorts in the Silver Coast. Conveniently located just three minutes from the town center and five minutes from the beach, the property includes a large balcony, a fireplace, a private storage room, and a parking place. Price: $103,500.

Buying Property in Portugal

A Portuguese real estate agency is usually called an agenzia inmobiliaria. After you’ve found the property you wish to purchase, and the agent has forwarded your offer, the first part of the process is usually a verbal agreement between the vendor and you, the buyer. It’s advisable to have a lawyer to check title, etc.

A preliminary contract lays out the terms of the sale, including the completion date. At this time a deposit is paid, usually 10%. You will lose your deposit if you subsequently withdraw from the purchase. However, should the seller back out, he/she must pay you twice the value of your deposit.

On completion of the sale, and the transfer of ownership, both parties sign the escritura (the title deeds) before a notary. The balance of the purchase price plus all fees and taxes is paid at this time.

For purchase related fees, the ballpark figure is 10%. Depending on declared value, transfer tax goes from 0% to 8%. Legal fees are 1% to 2%; notary and land registry fees around 2.5%; and annual local taxes can be up to 0.8%. Agents’ fees mostly range from 3% to 5%, though the seller pays these.

You will need a fiscal number (número de contribuinte) from the local tax office. This is a tax number, in the form of a card, and is required to open a bank account and pay the rates and utilities on the property.

Until a couple of years ago, it was difficult for non-residents to secure a loan, but times have changed. In January 2017, it became possible to borrow up to 70% of the asking price or 70% of the valuation—85% if you are Portuguese—on a property.