This article will show you how the Algarve residential real estate market has changed from August to October 2023. We will check in detail the rise and fall of prices for buying and long-term rentals of houses and apartments. Moreover, although a little less detailed, we will assess the state of the market for short-term tourist rentals. And at the end, we will list the most expensive and cheapest real estate for sale right now.
The Algarve region is the south of mainland Portugal. Its south and west have direct access to the Atlantic Ocean, while the east borders Spain. The word Algarve is associated with summer vacations on the beach, not only for the Portuguese, but also for foreigners. The latter come there both on vacation and for permanent residence. According to the latest census, there are municipalities in the Algarve where the share of foreign population is up to 26% (with a national average of around 5%). Let's try to understand whether this interest of foreign buyers and tenants, among whom there are many natives of wealthier countries than Portugal, influence the prices of real estate in the region.
Dynamics of real estate prices in the Algarve
We will start our price analysis from Idealista.pt, one of the main real estate search sites in Portugal. Since November is not over yet, we will study the data for August, September, and October.
As we can see, prices per square meter at sale grew evenly, but the rate was quite modest. Just the growth rate of rental prices varied. The growth from May to July 2023 is more noticeable. In September, a very gradual decline began. This is a summary chart including all municipalities in the region. Further, we will consider each municipality separately.
Real estate for sale in the municipalities of the Algarve
The table above shows the average price per square meter of properties by municipality within the Algarve that are listed for sale on Idealista.pt (columns 1-3). Column 4 shows how the price has changed over the three months: by how many percent it has increased or decreased. Column 5 shows the change over the calendar year. The municipalities in the table are arranged in descending order of average price per square meter in October 2023.
The group of the most "expensive" municipalities, where the average price per square meter falls between 3,300 and 3,900 euros, are Loulé, Lagos, Vila do Bispo, Lagoa, Aljezur and Albufeira. Among them, the municipality of Loulé is the leader, where the average price per square meter in October was 3.888 euros, the result of a tiny quarterly increase (0.6%) and a moderate annual increase (6.6%). Loulé is located in the center of the region, but belongs to its eastern part. Loulé has an excellent recreational infrastructure for every taste: beaches, tennis schools, golf courses, fitness clubs, shopping centers, churches, castles, casinos and much more. For example, among golf enthusiasts, the town of Vilamoura, also located in Loulé, is well known.
The other municipalities in this most expensive group are in the western Algarve.
It is in the west of the Algarve that there is the highest concentration of people who have migrated to Portugal from other countries (20-26% of the population). As the west of the Algarve has access to the ocean on two sides, this subregion has more beaches and is more attractive for vacationing.
Over the last 3 months, the prices per square meter in 5 municipalities changed differently, but not significantly. Somewhere they increased slightly, somewhere - slightly decreased. All of them showed annual price growth, but mostly moderate. Against the general background, Albufeira stands out in this group, where prices increased by 12.6% during the year, and Aljezur, where they increased by 21.9%.
In the next group of 8 municipalities, the average cost per square meter is between 2,200-3,000 euros:
- Silves, Portimão and Monchique located in the western part;
- Tavira, Faro, Vila Real de Santo António,Olhão and São Brás de Alportel located in the eastern part.
In all of these municipalities, the changes over the last three months are also not significant: it was either a slight increase or a slight decrease. The only municipality where the price decreased markedly over the 3 months, by 6.2%, is Monchique. If we mention the dynamics over the year, this group is also characterized by a moderate increase in prices, and only 3 municipalities fall out of this trend: Faro (16.2% increase), Silves (13.3% increase) and again Monchique (3.4% decrease).
Rounding out the list is the municipality of Alcoutim, which is very far behind the rest in terms of cost. This municipality has no access to the ocean at all, which probably explains its relative cheapness. There, the average cost per square meter was 750 euros in October, which was the result of a barely noticeable decline in prices over the last 3 months (-0.4%) and a fairly significant annual decline (-14.3%).
Are Idealista.pt's statistics to be really trusted?
Idealista.pt statistics are based on data taken from housing ads published on the same website. It is clear that this data does not fully describe the situation on the market. Theoretically, it is possible to sell property without publishing on Idealista, although in the case of the Algarve region, this would be the exception. There is also the possibility that when the transaction takes place, the amount will be different from the price requested by the seller in the advertisement.
To check if we can rely on the data from Idealista.pt, let's compare its report with the one provided by the Portuguese National Institute of Statistics (INE).
The Institute of Statistics publishes quarterly reports on real estate prices in sales transactions. Currently, the most recent report available is for the second quarter (April–June) of 2023. If we compare prices for Q2 2023 from both sources, we can see how accurately Idealista reflects the realities of the Algarve real estate market.
The table shows the real average price per square meter in sales transactions according to the National Institute of Statistics (column 1), the average price per square meter from ads from Idealista.pt (column 2), and the difference between them in percentage terms (column 3).
In the vast majority of municipalities, the prices in real estate sales transactions were lower than in Idealista.pt advertisements for the same period. Somewhere they were lower by a couple of percent, and somewhere they were twice as low. And there are municipalities where the average price from the actual transactions was slightly higher than from the ads on Idealista. So it is very difficult to identify any pattern.
There are many possible explanations for such differences in the data from these two sources. However, we will still use the statistics from Idelista.pt for a rough estimate of the situation, as we do not have more accurate tools available at the moment. When analyzing the information from Idealista.pt, it is important to always remember that the price stated by the seller can be changed in the course of the transaction.
Long and medium-term rental properties in the municipalities of the Algarve
Let's take a look again at the data from the portal Idealista.pt
The table above shows the average price per square meter of properties whose rental ads are published on Idealista.pt (columns 1-3). Column 4 shows how the price has changed over these three months: by how many percent it has increased or decreased. Column 5 shows the change over the calendar year. The municipalities in the table are arranged in descending order of average price per square meter in October 2023.
In the previous 3 months, rental offers were not published in all municipalities of the Algarve. The most expensive in terms of rental rate per square meter is Loulé with 15.8 euros per square meter, which is the result of a fairly rapid annual increase (21%). Nevertheless, the price has not changed in the last 3 months. In most of the other municipalities, however, the situation is quite interesting: prices have fallen since August, but since last October they have risen really noticeably. The champion in terms of quarterly decline was Vila Real de Santo Antonio (-11.11%), and the champion in terms of annual growth was Faro (32%).
Daily rentals in the Algarve municipalities
As the Algarve is firmly associated with summer vacations, life there in the off-season is entirely unique. The flow of tourists never drops to zero, but it is still greatly reduced. Many tourist-oriented businesses just close down. Therefore, not everyone likes to stay there for the winter. And the one who buys housing in the Algarve may be interested in spending only part of the year there. The rest of the time, the accommodation can be rented out to tourists as Alojamento local.
How promising it is, for example, can be assessed using the All The Rooms service. It shows the average price per night in all tourist accommodations in the selected region (municipality, city, neighborhood) rented through AirBnb. It also shows the number of available tourist accommodation in the region. The table below shows data for 3 months, from August 1 to November 1, 2023. The service gives prices in dollars, and in the table below they are converted into euros at the current exchange rate.
Unlike the data from Idealista.pt and the National Institute of Statistics, which we analyzed earlier, All The Rooms is not connected to the average cost per square meter. Therefore, the table above shows average values for all properties rented during this period (these can be both large villas and small rooms). Nevertheless, even this data helps to start to get a feel for the situation.
The majority of daily rentals are open in the municipalities of Albufeira (8,687), Lagos (5,238), Portimão (4,297), but in terms of average price per night, São Brás de Alportel leads the way, with far fewer properties on offer. Those who stayed in the Algarve in the fall of 2023 paid on average per night: 215.28 euros in São Brás de Alportel, 186.76 euros in Albufeira, 154.56 euros in Loulé. The cheapest night in Monchique would be 96.6 euros.
If you are considering renting out your future home in the Algarve, WithPortugal.com can put you in touch with an Algarve vacation property manager who can help you both use the property for your vacation and generate income from it the rest of the time.
The most expensive and cheapest real estate available in November 2023
Currently on Idealista.pt you can find 11.630 listings of houses for sale, some of them are under construction, some of them are even in the design phase and some of them are 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 was also featured in the summer review.
18.500.000 euros A house of 695 square meters. 8 bedrooms, 9 bathrooms. The house was built in 2013. The plot is 1.677 square meters. The property has a garage, garden, swimming pool. Energy efficiency class is not specified. Municipality of Albufeira. And this house we also saw in the summer review, still not sold.
14.500.000 euros A house of 1.030 square meters. 7 bedrooms, 4 bathrooms. The plot is over 2.000 square meters. The property has a garage, garden, swimming pool. The house has central heating. There is a Jacuzzi on the roof. Energy efficiency class B. Municipality of Loulé.
Minimal prices for ready-made houses, which can be occupied immediately, without making major repairs
68.000 euros A small village house of only 45 square meters, without a plot. 1 bedroom and 1 bathroom. The house was built in 1951, so there is no energy efficiency certificate. Located in a village in the municipality of Loulé. In August, the same house was on sale for 71.500 euros. Who knows, maybe next quarter the price will be reduced again?
78.000 euros A house of 50 square meters with one bedroom and one bathroom. Built in 1951. Judging by 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. Municipality of Alcoutim.
88.500 euros A cute 2-storey house of 30 sqm with one bedroom and one bathroom. Judging by the pictures, the state of repair is good. The plot is 37 meters. No energy efficiency certificate. Municipality of Castro Marim.
If we discuss apartments in the Algarve, there are 11.382 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
395.000-445.000 euros Several listings with identical pictures and addresses but such different prices. A studio of 83-85 square meters with 1 bathroom. Second floor. The apartment has a tourist property license. The apartment complex has a swimming pool. Energy efficiency class A. Municipality of Albufeira. Perhaps there is a logical explanation for such a variation in the prices of listings with this object.
375.000 euros An apartment of 62 square meters with an interesting concept. According to the seller, it is a studio, but it has 2 bedrooms, or rather 2 isolated compartments with beds. Judging by the picture, the walls that separate these compartments from the main room and from each other are purely symbolic. The apartment is on the 21st floor. The house has an elevator. Energy efficiency class D. Municipality of Loulé.
Cheapest studios in the Algarve
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.
78.000 euros A studio in the same or very similar complex, but a floor higher. Area of 38 square meters. Energy efficiency class C. Located in the municipality of Albufeira.
There are a few more ads for studios for sale in tourist complexes. The prices are slightly higher, but the conditions are not much different. But the prices for properties in ordinary residential houses start from 100,000 euros.
109.000 euros A studio of 35 square meters with fresh renovation. The house was built in 1988. No energy efficiency certificate. Municipality of Portimão.
120.000 euros A studio of 22 square meters in a gated condominium. The property has a swimming pool and laundry room. The apartment has 1 bathroom. There is a balcony with an oven/grill. The house was built in 1988. Energy efficiency class E. Located in the municipality of Albufeira.
123.000 euros A studio of 36 square meters. There is air conditioning. There is a balcony. The house was built in 1988 and is in the process of renovation. Energy efficiency class C. Municipality of Portimão.
To summarize about the Algarve real estate market this fall
The Algarve is a favorite summer and early fall destination for Portuguese and foreigners alike. This region attracts wealthy people from different countries due to its location near the ocean, and therefore there is a well-developed vacation infrastructure for wealthy visitors. And this is an additional factor that determines the level of real estate prices.
The data we examined indicated a steady increase in residence prices in this region over the course of the year. However, as we could see, sellers started lowering prices in the fall. In many cases, this didn't help their real estate sales. The most expensive options we saw in the August listings are still unsold. It's also interesting that some of the cheapest options haven't found buyers either. Apparently, this is because they are the most inconvenient, and therefore they are not bought even at these prices. However, statistics of actual transactions show that the final sale price can be much lower than the price from the ad, initially set by the seller.
An apartment or house in the Algarve can be a source of passive income. If the buyer does not intend to live in the Algarve permanently, he can rent out the property for daily rent during the periods when it is not in use. If you are interested in this option, you can contact professional real estate agents in Algarve through our website. They will help you at every stage of the process, both when buying a property and when renting it out.