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Housing: What Can You Buy With €100,000?

20 August 2017

 

You can buy a 221 m2 house in Alcanena for the same price as a 41 m2 property in Lisbon

The three municipalities with the highest average sale prices per square meter of housing in Portugal are Lisbon, Cascais and Loulé.   This is according to data for the first quarter of 2017, published by the magazine Confidencial Imobiliário. At the opposite end of the spectrum, the three cheapest areas are Alcanena, Tábua and Alter do Chão. High demand and foreign investment are pushing up prices in the most sought-after areas, while excess supply and more remote interior locations account for the lower prices.

Of the 308 municipalities in Portugal, Confidencial Imobiliário could calculate average prices for only 154. Although data are not available for the country as a whole, they already give an idea of the current situation in Portugal. Lisbon, with an average price of €2404 per square meter, is the most expensive municipality in the country, followed by Cascais (€1762) and Loulé (€1702). Oeiras (€1532), Albufeira (€1405), Tavira (€1375), Porto (€1329), Lagoa (€1303), Loures (€1270) and Lagos (€1267) are also included in the top 10 most expensive municipalities in Portugal.

Based on these amounts, Expresso wanted to find out what an interested buyer could get for €100,000. As it turns out, it’s enough to buy 41 square meters worth of residential property (the actual amount is 41.59 m2, but in this case as in the others, we rounded it down, both for simplicity’s sake and since rounding up would have caused the price to exceed the limit we set for ourselves). But what are the factors behind the elevated prices? According to Ricardo Sousa, CEO of the real estate brokerage Century 21 Portugal, Lisbon’s residential and commercial spaces have undergone a major transformation over the last years.  In areas that were strictly commercial or even uninhabited previously, today tourist accommodations have sprung up.

“The number of transactions originating from international clients has increased exponentially in recent years.  Much of the property that was previously bought solely by Portuguese nationals is now the focus of international customers, who can avail themselves of superior purchasing power.” He adds that developers have been very focused on the luxury segment and with the reduction in housing supply, which is due to the continuing transformation of older residences into hotels or tourist accommodations, prices have been increasing in areas subject to this kind of redevelopment.

Not All of Lisbon Is the Same

Property values in Lisbon, however, are not the same all over the city, and prices only really go up with proximity to the Tagus River and the city’s historic centre. “In Chiado and Baixa, where the supply of permanent housing competes with tourist-based housing, the few properties that come on the market have seen significant price increases,” Century 21’s CEO confirms. In his opinion, Lisbon’s supply of permanent housing is inadequate. Families that work in affected areas and would like to live there as well are being forced to move to neighbouring counties because they are unable to pay prices that have been inflated by foreign buyers. “Once these local buyers arrive in the surrounding counties, prices are also pushed up there, forcing out the current inhabitants and creating a knock-on effect,” he adds.

In Cascais, quite close to the centre of Lisbon, €100,000 will buy you 56 square meters. With high-end residential properties and closed condominiums, the area has always been more expensive. Today, according to Ricardo Sousa, international demand has increased even more and buyers are now looking for houses with greater living areas. “Water is good for real estate and proximity to the sea inflates prices,” he says. Then there are high-end developments in closed condominiums in places like Penha Longa. Clients who are looking to buy in the historical centre, which is largely the case of French buyers, are facing a shortage of available housing.

Ricardo Sousa predicts that prices in these two municipalities, if the luxury segment is excluded, will stabilize. “Such a stabilization is also necessary, especially considering the lack of affordable housing for Portuguese families. Price increases that have been seen in recent months will eventually have to be moderated by the limits of Portuguese buyers’ disposable incomes,” he argues.

High Prices on the Coast

In the south of Portugal, Loulé comes in as the third most expensive area, where €100,000 will buy 58 m2. The factors behind the high prices are the same as before. Miguel Fernandes, who manages the real estate brokerage Garvetur’s stores in Loulé, says that “Loulé is the largest municipality in the Algarve and the third largest in the country, and there are variations in the region. The area south of the EN125 road, on the coast, has greater population densities and more tourists, and therefore the highest levels of demand. Even within this small area there are variations.  In Quinta do Lago, the average prices per square meter can reach €3000.

The idea that water benefits real estate prices obviously also applies to housing in the Algarve.  It is therefore not surprising that Miguel Fernandes says that the Barrocal region (an area between the mountains and coast) or in the mountains, the price per square meter drops substantially. A house there can go for €800/m2. There is a greater demand for secondary residences on the coast, again with the French as the principal buyers.

With its variety of options for residences, both in the mountains and close to the beach, Miguel Fernandes considers Loulé an attractive municipality and explains that prices have been increasing by 5% on an annual basis. The trend is expected to continue.

The Least Expensive Areas

As for our analysis of the cheaper municipalities, Alcanena appears at the head, with prices of €452/m2. Tábua comes in second, at €455/m2, followed by Alter do Chão, at €468. The list of the ten cheapest areas in Portugal also includes Mangualde (€474), Mealhada (€490), Belmonte (€499), Castro Daire (€508), Amarante (€510), Chamusca (€517) and Oliveira do Bairro (€519).

Going back to the analysis, €100,000 would be enough to buy 221 m2 in Alcanena (almost five times more than in Lisbon), a county in the district of Santarém with 13,868 inhabitants. Herculano Gonçalves, a managing partner of the real estate brokerage Coseli 2, which is based in the municipality, insists that “there is little demand for, or supply of, housing in the region.” The village of Alcanena is small and whether properties are in the centre or in the more rural areas, prices differ little, according to the executive. “We are not a very inland zone, but we have the characteristics of small counties of the interior”, affirms Herculano Gonçalves. He also says that of the properties that are on sale, a large percentage require renovations, another factor that helps explain the lower prices.

Foreign Buyers in Tábua

In Tábua, the second cheapest area, where €100,000 will buy 219 square meters of property, over-supply is at the heart of the problem. Helena Terlouw, a Dutchwoman, owns the real estate brokerage Terra dos Rios, headquartered in the county. “There is more supply than demand and there are many houses dating from the 70s and 80s, which are poorly built.  They are liveable, but would require extensive renovations,” she says. Houses in the centre of this village in the district of Coimbra, the seat of a municipality with 12,071 inhabitants, are more expensive than in the rural areas.

There are foreigners interested in buying in this county. “They usually look for small farms or houses in villages. We have a relatively large community of foreigners, including some Dutch, English and Belgians, who have been acquiring real estate over the years, as permanent or secondary residences,” Helena Terlouw explains. However, prices, in her analysis, are expected to remain stable in the coming years.

Next, we get to Alter do Chão in the Alto Alentejo, the third cheapest in our list. Demand is exceeded by supply in this municipality of 3562 inhabitants, and transactions are dominated by secondary residences. Hugo Guedelha, a salesperson at Remax Portalegre, says that people from Lisbon, and who have a connection to the area, want to have a property here. “We are in a very central zone in the Alentejo, with good access and there are plenty of people interested in having a house here, where prices are also significantly lower”, the real estate agent stressed.

Available properties include older houses, many of which were inherited and need renovations, and some that have already renovated, both in towns and villages. Hugo Guedelha considers that the market has reached an optimum point. “Current prices are good both for sellers and buyers,” he concludes.

Some big urban centres that also have prices above €1000 are Odivelas (€1217) or Matosinhos (€1046). The least expensive ones, with prices under €600/m2 include places like São João da Madeira (€587) and Fundão (€548).

Original Story: Expresso – Maribela Freitas

Photo Credit: José Carlos Carvalho

Translation: Richard Turner