A series of factors contribute to the recent surge in prices in the real estate market in Lisbon in particular and throughout Portugal in general.
- An exodus of residents over the past half century from the historical centres;
Until the recent boom, central Lisbon has been experiencing degradation and urban flight over the past 50 years.
- One of the lowest property taxes in Europe;
Rates in Portugal are a fraction of most EU countries, easing the plight of many Portuguese property owners: “Land rich, cash poor”.
- Modest cost of living in Portugal (the lowest in Western Europe);
Due to low wages and severe austerity measures, the cost of living in Portugal is an additional attraction many investors and retirees.
- A legal, fiscal and market framework creates conditions discouraging long-term rentals;
Long-standing legislation favouring tenants over landlords have left many property owners reluctant to let long-term.
- The popularity of Portugal and the subsequent explosion of general tourism;
Lisbon and Oporto are “hot” tourist spots. These inviting cities have become preferred destinations for holiday makers in the European Union.
- The post-crisis revival of residential tourism;
Portugal is rapidly becoming the “Florida” of Europe, attracting retirees from northern European countries.
- Low-cost airlines create affordable “bridges” throughout Europe;
Inexpensive flights have opened travel options for millions of tourists, both young and old making long weekends and occasional “escapes” affordable options.
- Portugal is one of the safest countries in the world;
Low crime rates and only a minor threat of terrorism make Portugal a safe haven in an increasingly insecure world.
- Golden Visa popularity
The ready availability of European permanent residence visas and eventual dual nationality in exchange for real estate purchases above €500,000;
- Non-Habitual Residence programme success;
Pensioners and freelancers are two significant groups lured by a promised tax holidays under “NHR”.
- Real estate investment enhanced by near-zero interest rates;
The historically low cost of borrowing and the renewed openness by banks to lending have fanned the flames of real estate investments.
- Absence of Capital taxes
Portugal has neither a Wealth Tax nor Gift and Inheritance Tax between immediate family members.
Policymakers routinely fail to anticipate the consequences of most of these factors or show flagrant indifference to them.