This material will clarify to you what changes have occurred in the real estate market in the Algarve region from November 2023 to January 2024. We are going to take a look in detail at the price dynamics for the purchase and long-term rental of residential houses and apartments. In addition, we will touch on the situation of the short-term rental market for tourists. You will also be able to familiarize yourself with the list of luxury and most affordable housing options that are currently for sale.
The Algarve region is located in the very south of continental Portugal, washed by the Atlantic Ocean to the south and west and bordered by Spain to the east. It is a favorite holiday destination for the Portuguese, and for foreigners it is also an excellent choice for permanent residence. According to the 2021 census, this region has the highest concentration of foreign population in the country. In some municipalities it is up to 26% of the total population. It will be interesting to see if this high level of attention from foreign buyers and renters, many of whom are from wealthier countries, has an impact on real estate prices in this region.
Dynamics of real estate prices in the Algarve
For the analysis, we will use statistics from Idealista.pt, one of the main portals with real estate listings in Portugal. Since February is not over yet, we will look at data for November, December, and January. The graphs below show the changes in the average cost per square meter of real estate by month. The information is taken from the listings published on this site.
It is noticeable that prices per square meter of real estate at sale grew evenly, although the rate of this growth was rather moderate. However, the rate of change in rental prices varied. From May to July 2023, there was a more marked increase. September saw a gradual decline, and from October onwards there was a gradual increase. This is a general trend across all municipalities in the region. In the future, we will consider each municipality separately for a more detailed analysis.
Real estate for sale in the municipalities of the Algarve
The table above shows the average price per square meter of real estate by municipality in the Algarve region (columns 1-3). The fourth column shows the percentage of change in price over the last three months. The fifth column shows the change over the whole calendar year. First on the list is Faro, the administrative capital of the Algarve, and then the municipalities in the table are ordered by descending average price per square meter as of February 2024.
Interestingly, Faro is not the most expensive municipality in the region. The average price per square meter in January 2024 was 2,920 euros, which is 1,069 euros below the most expensive municipality. Since November last year, the price has increased by only 0.31%, which is at the level of statistical error. But over the year, the price has increased significantly, by 14%.
Municipalities where the average price per square meter is the highest, between 3,000 and 4,000 euros, include Loulé, Lagos, Vila do Bispo, Aljezur, Lagoa, Albufeira and Tavira. Loulé tops the list. There, the average price per square meter in January was 3,989 euros. This result was achieved thanks to moderate quarterly growth (2.31%) and year-on-year growth (7.4%). Located in the eastern part of the region, Loulé offers a well-developed infrastructure for various leisure activities, including beaches, tennis schools, golf courses, fitness clubs, shopping centers, churches, castles, casinos and much more. For example, the city of Vilamoura, known for its golf courses, is also located in Loulé. The municipality of Tavira is also located in the eastern part of the region.
The other municipalities in this most expensive group are in the western Algarve.
Just to the west of the Algarve, there is the largest concentration of residents who have moved to Portugal from other countries (20-26% of the population). This subregion is washed by the ocean on two sides and therefore has the largest number of beaches.
Over the last 3 months, prices per square meter in these 7 municipalities have changed slightly in different directions, but the changes have been minor. In some places prices increased slightly and in others prices decreased slightly. All of these municipalities showed year-over-year price increases at an average rate. Against the general trend in this group, and in the whole Algarve region, Aljezur stands out, where the price decreased by 2.82% during the quarter (the largest quarterly decrease) and increased by 17% during the year (the largest annual increase).
In the next group of 6 municipalities, the average cost per square meter is between 2.200-2.900 euros:
- Silves, Portimão and Monchique located in the western part;
- Vila Real de Santo António,Olhão and São Brás de Alportel located in the eastern part.
In all mentioned municipalities, changes over the last three months are also insignificant: either there was a slight increase or a slight decrease in prices. As for the dynamics over the year, this group also shows moderate price growth (from 6.5 to 11.7%).
The last on the list of municipalities is Alcoutim, which differs significantly in cost from the rest. This municipality does not have access to the ocean, which probably explains the low cost. In January, the average price per square meter here was 786 euros, which was the result of an increase of 4.8% over the last 3 months, but year-on-year there is a 6% decrease in price.
Are Idealista.pt's statistics to be trusted accurately?
Idealista.pt data is based on real estate listings published on this website. However, it should be taken into account that this data does not fully reflect the entire market picture. It is possible that a property has been sold without being published on Idealista, although this is more of an exception for the Algarve region. It is also possible that the actual transaction amount may differ from the price quoted by the seller in the listing.
Data on the average cost per square meter of real estate in actual transactions can be taken from a report by the National Institute of Statistics of Portugal (INE).
At the moment, the most current report available is for the third quarter (July - September) of 2023. By comparing prices for this period from both sources we will be able to assess how accurately Idealista reflects the current state of the real estate market in the Algarve region.
The table contains the actual average price per square meter in sales transactions based on data from the National Institute of Statistics (column 1), the average price per square meter from ads on Idealista.pt (column 2), and the percentage difference between them (column 3). Municipalities are sorted in descending order of average price per square meter, according to data from the Idealista website.
In most municipalities, real estate purchase transactions were concluded at prices lower than those indicated in the advertisements on Idealista.pt for the same period. The difference is mostly in the range of 13-25%. The exceptions were Portimão, where the price with Idealista was only a couple of percent higher than the actual price, and Tavira, where, on the contrary, the average price with Idealista refused 5.3% lower than the actual selling price per square meter. The most notable discrepancies were observed in Lagoa (27.07%), SIlves (28.24%) and Olhão (30.24%).
There are many possible reasons why the data from these two sources diverge so much. However, we will still use the statistics from Idealista.pt to analyze the current situation, as we do not have other tools with more recent information. When researching information from Idealista.pt, it is important to keep in mind that the price quoted by the seller may change during the transaction process. Those who are going to bargain with the seller when buying a property, it is better to consult a professional real estate agent in Algarve who, understanding the market situation, can predict the success of such a plan.
Long and medium term rental properties in the municipalities of the Algarve
Let's turn again to Idealista.pt's statistics.
The table below shows the average prices per square meter of properties for rent on Idealista.pt (columns 1-3). Column 4 shows the percentage increase or decrease in price over the last three months. Column 5 shows the change over the calendar year. The capital city, Faro, comes first. After it, the municipalities in the table are ordered by decreasing average price per square meter in January 2024.
In the last three months, rental offers have not appeared in all municipalities of the Algarve. The highest rental rate per square meter is 16 euros in Loulé. The price did not change during the quarter, but the annual increase was very intense, 20.9%. In other municipalities, the prices for the quarter changed differently: somewhere they slightly decreased, but for the year, mostly all increased. Vila Real de Santo António stands out, the only municipality that saw a small decrease in price over the year. And Faro, which was the champion in terms of annual price growth (27.2%).
Daily rentals in the Algarve municipalities
The Algarve is primarily a summer vacation destination. And in the low season, life there changes dramatically, slowing down. The flow of tourists never completely disappears, but it is significantly reduced. Many tourist enterprises simply close down. That is why not everyone likes to stay there for the winter. Those who buy property in the Algarve may only be interested in spending part of the year there, and the rest of the time they can rent it out to tourists as an Alojamento local. Tourist property management services are particularly relevant in the Algarve.
How much you can earn from short-term rentals of furnished houses and apartments in Portugal can be calculated by the All The Rooms service. The data reflects the average rental rate per night in all tourist accommodation in the selected region available on AirBnb. It also provides information on the number of all accommodations in the region. The data below is for the last 3 months, from November 1, 2023 to February 1, 2024. The prices shown in the service are in dollars, but in the table they are converted to euros at the current exchange rate.
Unlike the data from Idealista.pt and the National Institute of Statistics, which we have analyzed before, All The Rooms does not operate with an average cost per square meter. Therefore, the table below shows the average values for all accommodation units rented during this period (including both large villas and small rooms). Nevertheless, even such data helps to understand the preliminary prospects for short-term rentals.
Interestingly, the administrative center of the region, the city of Faro, is not a leader neither in terms of the number of tourist accommodation facilities, nor in terms of the cost per day of rent. In terms of the latter parameter, it is even in the outsiders, with a cost of 95 euros.
The highest prices in winter 2023-2024 were in Portimão (193 euros), Monchique (165 euros), São Brás de Alportel (163 euros). And the lowest - in Vila Real de Santo António (83 euros). The majority of daily rentals are in the municipalities of Albufeira (9,161), Lagos (5,485), Portimão (4,539).
The most expensive and cheapest real estate available in February 2024
At the moment on Idealista.pt you can find 11,633 listings of houses for sale, some of them under construction, some of them even in the design phase and some of them as ruins that need to be rebuilt. In this review, I will include only the completed properties.
The most expensive residential houses in the Algarve
19.000.000 euros
A villa with 7 bedrooms and 7 bathrooms. The plot of land is 0.7 hectares. The area of the house itself is 740 square meters. The house was built in 2004. The property has a swimming pool, garden, garage. Municipality of Albufeira. Energy efficiency class D. This house has been for sale since at least last summer.
14.500.000 euros
The house is 540 square meters. 4 bedrooms, 4 bathrooms. Plot area of more than 2,000 square meters. There is a swimming pool on the plot. The house was built in 2001 and is decorated in Arabian style inside (just like a palace of a medium-sized sheikh). Energy efficiency class B. Municipality of Lagos.
13.750.000 euros
House of 797 square meters on a plot of 6,000 square meters. 5 bedrooms, 7 bathrooms. Garden and swimming pool on the plot. Energy efficiency class C. Municipality of Loulé.
Minimal prices for ready-made houses that can be moved into immediately without major renovations
69.000 euros
A village house of only 48 square meters with a plot of 76 square meters. 2 bedrooms and 1 bathroom. Some renovation will be needed. Energy efficiency class E. Located in the municipality of Castro Marim
78.000 euros
A 50 square meter house with one bedroom and one bath. It was built in 1951. Judging from the pictures, the inside is freshly renovated, but the outside does not look good. There is a microscopic plot of land. No energy efficiency certificate. Alcoutim municipality. We saw this house in the autumn review at the same price.
85.500 euros
A cute 2-storey house of 30 square meters with one bedroom and one bath. Judging from the photos, the state of repair is good. The plot is 37 meters. No energy efficiency certificate. Municipality of Castro Marim. In the autumn, it was offered for 3,000 euros more expensive.
If we talk about apartments in Algarve, there are 11.422 of them on the portal. For example, let's take studios, which can be used both for your own vacation and for daily rent to tourists.
The most expensive studio apartments
375.000 euros
An apartment of 62 square meters in a prestigious residential complex with a swimming pool, sauna and Jacuzzi, gym and other infrastructure. The house was built in 2011. Energy efficiency class B. Municipality of Lagos.
320.000 euros
A studio of 35 square meters. It is for sale with furniture and appliances. Energy efficiency class C. Municipality of Lagos.
310.000 euros
The studio is 187 square meters. The bedroom is separated from the kitchen-living room, so it is quite possible to put an interior door. There is a balcony and a terrace. Energy efficiency class C. Municipality of Portimão. The apartment was previously sold for 335,000 euros, according to the website.
The cheapest studios in the Algarve
72.500 euros
A studio of 45 square meters on the top floor of an apartment hotel. There is a license for tourist rentals. The garage is included in the price. The complex has a swimming pool, gym, children's room and garden. Energy efficiency class C. Municipality of Albufeira.
75.000 euros
A studio of 29 square meters in an apart hotel. Located on the basement floor. There is air conditioning. The house was built in 2003. There is a swimming pool and a garden on the territory of the complex. Energy efficiency class C. Municipality of Albufeira. We saw this option in the autumn review.
To summarize about the Algarve real estate market this winter
The Algarve is a very popular destination for both Portuguese and foreigners, but this popularity varies greatly depending on the season. The region attracts wealthy people from all over the world due to its location by the ocean and its well-developed infrastructure aimed at the affluent public. This is an additional factor influencing the level of real estate prices.
The data we researched shows a steady year-over-year increase in home prices in this region. However, as we noticed, many of the condos and homes we saw last autumn are still unsold. This applies to both expensive and cheap options. For some properties, even those in the cheapest category, sellers are lowering their prices. In general, the statistics of actual transactions show that the final sale price may differ significantly from the price initially set by the seller in the advertisement.
Real estate in the Algarve can be a source of passive income if you are not going to live there permanently. In this case, you can rent out your property on a daily basis when you are not using it yourself. If this option interests you, you can contact a real estate agent in the Algarve through our website. An expert will assist you in all stages, from the purchase of the property to renting it out on a daily basis.
