Buying or renting a home in Portugal: which will cost less?

Before moving permanently to another country, many future emigrants think about the question of whether to buy housing in a new place or rent it for a long time. In some countries it will be cheaper and more practical to rent an apartment or house, while in others, which includes Portugal, it is definitely more profitable to be their owner.

This conclusion was reached by experts who analyzed the current state of the Portuguese real estate market. As it turned out during the study, when buying residential property in Portugal, you can save up to 260 euros per month over three decades, and its cost will be less than 70% of the amount that would be spent on rent.

Buying or renting a home in Portugal: which is cheaper?

According to the latest data from the National Institute of Statistics (INE), dating back to March 2021, of every 100 residential properties sold in Portugal, only 32 are subsequently rented out. At the same time, 93.8% of available apartments and houses were put up for sale, although a different picture was observed in Lisbon and the surrounding suburbs. This is the only region where 1 out of 7 properties is intended for rent, while in the rest of the country this ratio is 1:33.

To conduct a comparative analysis, the cost of renting an apartment in Lisbon was taken in the amount of 900 euros per month. After 35 years, tenants would have paid €378 thousand, from which €15,570 can be excluded as currently existing tax deductions. As a result, 360,430 euros would have been spent over the entire period of use of this object, and its purchase in March 2021 would have cost 195 thousand euros excluding taxes and fees.

In the case of the acquisition of the same property by two investors (spouses) using a mortgage with an installment plan for 35 years in the amount of 80% of the cost, the total amount would be 250,491 euros, which is also much cheaper than the corresponding rent. In addition to bank interest, this includes payment for notary services, legal support, municipal tax on the transfer of property by inheritance, full real estate insurance and life insurance of the borrower. At the same time, costs can subsequently be reduced if you rent out the property.

Buying or renting a home in Portugal: which is cheaper?

In any case, many factors can influence the final decision, ranging from family situation to the availability of housing for long-term rental in a particular region. It should also be taken into account that there is a possibility that both individual conditions or circumstances and the situation in the real estate market as a whole may change over time.

However, buying a home in Portugal is a profitable investment and an opportunity to earn income from both rental and subsequent resale. Suffice it to say that over the past 6 years (from May 2015 to May 2021), the cost of one square meter of residential real estate in Portugal has more than doubled: from 1077 euros to 2200 euros, reaching its historical maximum, and did not fall even at the height of Covid-19 pandemic. As for the rental price, over the past 2.5 years it has varied between 11-11.9 euros/sq.m. per month.

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