The real estate market continues to be dominated by domestic buyers, but the weight of foreigners has never been greater than in the second half of this year.

According to data from the Bank of Portugal in the November Financial Stability Report and reported by ECO, “in the accumulated of the four quarters ending in June, non-resident buyers represented 11.7% of the value of housing transactions in Portugal.” This value compares with the weight of 8.9% of transactions carried out by foreigners in the previous year.

According to the Bank of Portugal, the amount of business in the real estate market involving non-resident buyers reached almost €30 billion in the second quarter of this year. In 2021, in the same period, it was below €25 billion.

Who is buying?

Among the main foreign buyers of ARU houses in Lisbon in the first half are the French, who were responsible for 15% of the deals made.

However, in the last five years, the foreigners who bought the most homes in Lisbon's ARU had Chinese nationality: according to data from Confidencial Imobiliário, 1,371 properties have been transacted by Chinese buyers since June 2017, about 18% of the total homes purchased by foreigners in this period. Only then do the French appear, who in the last five years were responsible for the transaction of 16% of the properties.

Inflating prices

Banco de Portugal reveals that “housing transactions by non-residents have increased significantly in the recent period, in particular involving buyers residing outside the European Union”. And with this increase in demand, the price of real estate has also changed.

“House price growth has been more pronounced in regions where the weight of non-residents is higher and the percentage of housing transactions financed by domestic credit is lower”, says the regulator in the November Financial Stability Report.

The purchase of a house by foreigners continues to be mostly carried out with little recourse to bank credit. “Home loans to foreign citizens have increased in the recent period, but it continues to have a small weight”, reveals the Bank of Portugal, also indicating that the average transaction value by non-resident buyers is 95% higher than that of resident buyers.

Average prices

Among those who pay the most to buy houses in Portugal are buyers with tax domicile outside the European Union, in which the average transaction value in the first half of this year was €414,000, about 143% above the average value of transactions involving buyers residing in Portugal.

Real estate transactions involving buyers with tax domicile in other European Union countries, according to the Bank of Portugal, reached an average value of €265,000, around 55% above the average transaction value of buyers with tax domicile in Portugal.