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Where Are Homes the Hardest to Find? The Algarve
11 April 2018
The municipalities of the district of Faro concentrate the housing prices and rents that are furthest out of step with local wages. Here is a guide to the best places to buy or rent, depending on where you are looking to live in Portugal.
One in seven tourists in Portugal choose Albufeira as their destination, and the municipality receives the second largest number of visitors, just behind Lisbon, the most recent statistics reveal. However, people who wish to make a move to the region face a significant obstacle: it is one of the most difficult counties for buying or renting a home.
In the third quarter of 2017, family homes that were sold in Albufeira registered a median price of 1,524 euros per square meter, according to the National Statistics Institute (INE), which means that a 101-square-meter house would cost around 154,000 euros. In 2015, however, the average gross monthly income of the inhabitants of Albufeira was around 884 euros, according to the Strategy and Planning Office of the Ministry of Labor, Solidarity and Social Security. Thus, buying a come would cost the equivalent of fifteen years of income.
Renting often isn’t any easier. In 2017, new rental contracts in Albufeira had a median value of 5.78 euros per square meter or a monthly rent of 584 euros for a 101-square-meter home. This would gobble up 66% of the average worker’s gross earnings. The Portuguese government believes that housing costs are excessive when they surpass 40% of the household’s net income.
In order to evaluate housing prices in Portugal’s municipalities, the Observador compared home prices (using the price per square meter in the third quarter of 2017, the last available, and an estimate of the average housing area) and rents (contracts signed in 2017) with the residents’average monthly income (for 2015, the latest available at the municipal level).
Inexpensive homes are often found in the interior
In Boticas, in the district of Vila Real, gross salaries are among the lowest in Portugal: around 744 euros per month, on average. However, homes also have the lowest prices: 118 euros per square meter in the third quarter of 2017. That is why the municipality of Boticas is the least expensive place to buy a home: a 105-square-meter home, costing 12,390 euros, would cost the equivalent of 17 months of salary.
On the coast, such remote districts as Bragança, Castelo Branco and Guarda have the lowest housing prices and more affordable options to buy. One municipality has homes that are easier to afford not because of low prices but rather high salaries: Vila do Porto, on the Azorean island of Santa Maria. This region has the highest average incomes in Portugal.
The Algarve easily has the least accessible housing prices. In Lagos and Loulé, a home costs the equivalent of 16 years of income on average, according to the latest statistics. Similar difficulties can be found in other municipalities that are located close to the Atlantic, such as Cascais, Nazaré, Esposende, Lisbon, Mira, Mafra, Póvoa de Varzim, Odivelas and Funchal.
What about rentals?
Although there is less official data, our previous conclusions regarding the difficulties of buying a home can be extended to the rental market. The Algarve and in some municipalities in the district of Lisbon, including in the capital itself have the least accessible rental costs.
“In the urban areas of the country, especially in Lisbon, housing prices are very high compared to the local average income,” a recent study by Portuguese Catholic Caritas, a service of the Portuguese Bishops’ Conference, the grouping of bishops of the Catholic Church, reported recently. “Housing prices in Portugal, when compared with the average incomes, are out of step,” the analysis concludes.
In Cascais, the rent on a 104-square-meter home costs about 838 euros, almost 73% of the average monthly income for local workers.
In Belmonte, in the district of Castelo Branco, it is possible to rent a home measuring a little more than 100 square meters for 171 euros, the lowest among the 200 Portuguese municipalities with information on rental contracts signed in 2017. It is the equivalent of 23% of the local gross salary.
Where to Rent
Home prices in the Algarve are highly skewed compared to the local inhabitants’ income, but rental costs in the region are closer to the those of the rest of the country. An inhabitant of Lagos can pay a rent of about 554 euros for a home that would cost almost 170,000. That means that buying a home would cost the equivalent of almost 26 years of rent, well outside the norm in Portugal.
Although the district of Faro has such a disparity between rents and housing prices, the situation in Nazaré is even worse. The estimated price of a 100-square-meter is worth as much as 27 years of rent.
Renting can also be an attractive option in other municipalities around the country, such as Grândola, Mira and Ponte de Lima.
The municipalities where buying a home tends to make more sense are often located in the interior. In Gouveia, for example, a 107-square-meter home costs about 27,499 euros, according to the latest statistics, the equivalent of fewer than nine years of rent. In half of the 200 municipalities under analysis, housing prices were below the equivalent of 17 years of rent.
Original Story: Observador – David Almas
Translation: Richard Turner