Portugal rated as the best country to buy a second home in 2023

We know that is very hard to take the right decision and identify your dream home through thousands of properties, hundreds of seller agents, and dozens of attractive neighborhoods/resorts for each hot second home destination from Europe & beyond. Here at Directimo we are doing all the hard work for you and always looking for best destinations to buy a second home.

This is why we are bringing to you a recent study done by?Compare The Market Australia?that analyzed 34 OECD countries and compared the cost of living, leisure activities, and the increase in the price of houses to buy and rent. The study conclusion is that Portugal was rated as the best country to buy a second home in 2023, scoring 7.27 out of 10.

Secondary housing has more than doubled in Portugal in the last few years. Second homes have gradually gained ground near Lisbon or on the riverside and beach areas. Around 50.000 people decide to invest in a home every year in Portugal.?

As for the average cost of buying a house, the same study reveals that property values in Portugal have experienced a remarkable 67% increase over the course of a decade, while rents have grown by 21%. These figures underscore the immense potential for investment that a second home in Portugal offers. This holds true for both investors who acquire Portuguese real estate as a secondary residence, with potential plans for future sale, as well as homeowners who intend to rent out their properties as holiday home. Despite robust growth over the past seven years, residential properties in the capital of Portugal remain relatively affordable compared to other European capital cities, making them an attractive proposition. Notably, properties in Lisbon are still being sold at prices 30-50% lower than similar locations in London, Amsterdam, Berlin, and New York City, according to data from Numbeo.

According to Dylan Herholdt, Sales Director at a prominent Portuguese real estate agency, who has assisted a large number of international homebuyers, "Portugal has transcended its reputation as a mere vacation spot! The increasing number of international buyers from all corners of the world reflects Portugal's tremendous success as a secure investment destination for purchasing property."

While the decision to acquire a second home in Portugal used to be primarily driven by factors like quality of life, cuisine, scenic beauty, and the mild climate the country offers, many foreigners now seek other advantages, such as achieving a better work-life balance, ensuring personal safety, and benefiting from political stability.

In a turbulent geopolitical environment with Russia’s invasion of Ukraine, Portugal becomes even more attractive due to its privileged geographical position, far from conflicts, and at the same time with a low cost of living.

According to PwC Emerging Trends in Real Estate Europe 2023 Report, the biggest social and political concerns of the industry leaders are Russia’s invasion in Ukraine and the political instability (international and in Europe).

In this context, Portugal makes a good base for those who want to live in Europe, while staying far from the conflicts, moreover that the cost of living is one of the lowest in Europe and Portugal is one of the most foreign-friendly countries.

"Portugal is in a privileged geographical position, far from conflicts, at the same time that it continues to be a good base for those who want to live in Europe, a few hours by plane from two major decision-making centers, while offering good weather, beautiful landscapes, security and a good quality of life. ", affirms Pedro Megre, CEO of Unión de Créditos Inmobiliarios Portugal.

Also, according to The 16th Global Peace Index Report (GPI) from 2023 covering 99.7% of the world population, Portugal is the 6th most peaceful country in the world.?

Another fact is the high cost of living in property investors' countries of origin, which makes the price of Portuguese real estate and the average cost of living even more attractive.

According to data available on Numbeo, the cost of living for a single person is 657 euros per month, 40% lower vs London, 31% lower vs. Berlin, and 46% lower vs. Boston, USA.

It is no surprise that so many people want to invest in a dreamy Mediterranean place near the ocean, but that's not the only reason why so many people from all over the world choose Portugal.?

There is also the full eco-system that supports foreigners, starting from taxes, laws, friendly people, and the international environment (the majority of the people are speaking good English and it is easy to get along here).?

Portugal is the 7th country in the OECD with the lowest level of costs and taxes. Portugal has what is called a non-habitual residence (NHR) tax regime, a program that allows qualifying individuals the opportunity to become?tax residents?of a “white-listed” jurisdiction and still legally eliminate their taxes on most foreign-source income. The tax residency is valid for 10 years and does not come with the typical obligation that you visit or live in Portugal for part of the year to maintain your tax resident status there. The pensions remitted to Portugal are now taxed at 10% is still lower than that charged in many other countries and is a significant reduction on the usual Portuguese income tax rates ranging from 14.5% to 48%.?

Nonetheless, the ease of doing business and living in Portugal that applies from buying a home to working with a property management company or even doing your own business there has a high weight when thinking of a second home.

The Algarve and Lisbon Metropolitan Area regions have the highest proportion of foreign citizens: migrants represent 14.7% and 8.9% of their populations respectively.

Lisbon is unique in Europe and it seems to succeed to gather more cities in a single one: within 30-60 minutes you can play golf, surf in the ocean, stay with the locals or visit the city or be in the middle of nature.?

All in all, Portugal became in the past years a great destination for expats, digital nomads, and international investors?looking for a stable and profitable country to place their investments. The new nickname of Portugal “California Dream of Europe” speaks by itself: a safe country in Europe with delightful warm weather all year round, stunning unspoiled beaches, and an inescapable melting cultural pot, all this together makes Portugal the ultimate destination for foreigners looking for the finest place to invest and live.