The material will familiarize you with the latest trends in house prices in the Algarve region, the most popular tourist destination in Portugal. The huge attention to the region from foreigners, both tourists and investors, combined with the seasonality of tourist activity, make the situation in the real estate market in the Algarve unique for the country. We will take a closer look at the dynamics of prices for sale and rent of apartments and houses. We also show examples of current offers, so that the reader can get an idea of the price level in the region.
The Algarve is washed by the Atlantic Ocean to the south and west. It borders the Portuguese region of Alentejo to the north and Spain to the east. The Algarve has established itself as a popular resort destination not only for locals but also for numerous tourists from abroad. According to the 2021 census, foreigners make up around 15% of the total number of residents in the region, and in some municipalities this figure can be as high as 25-26%.
Dynamics of real estate prices in the Algarve
We will start studying information about the region with statistics from Idealista.pt, the largest real estate listings aggregator platform in Portugal. We will analyze the price fluctuations per square meter of housing in the Algarve between May and July 2024. The graphs below are based on information from the listings on this website.
As the charts show, there has been a noticeable trend in the change in housing prices over the last year. The average cost per square meter on the sales market has a stable growth trend with a rate of 8.4% per year.
Against this background, rental housing shows fluctuating prices. Approximately from September to November 2023, the average rental rate per square meter was decreasing. From December, a gradual increase began, and from May the increase became more noticeable. As a result, the average rental price per square meter for the year rose by 5.1%.
It should be noted that the presented graphs illustrate average indicators. Further we will analyze the situation in more depth for each municipality separately.
Real estate for sale in the municipalities of the Algarve
This table shows the average price per square meter of real estate in the different municipalities of the Algarve region. The first three columns show the prices for May, June and July, while the fourth column shows the percentage change in prices over the last three months and the fifth column over the year.
First on the list is Faro, the administrative center of the Algarve, and the remaining municipalities are distributed in descending order of average cost per square meter as of July 2024.
Faro is not at the top of the list in terms of real estate value. According to data for July 2024, the average price per square meter in this municipality is 2,979 euros, which places it near the end of the list. Since May, the average price has remained virtually unchanged. On a year-on-year basis, the municipality showed a very modest growth of 2.8%.
Loulé tops the list of the most expensive municipalities. Here, the average cost per square meter of housing was 4.073 euros in July. Compared to May, the price has decreased almost imperceptibly. And compared to July last year - increased by 6.8%. Loulé, located in the eastern part of the Algarve region, offers a rich infrastructure for a variety of leisure activities. There are beaches, tennis schools, golf clubs, fitness centers, shopping malls, historical buildings, casinos and much more.
Municipalities where the average price per square meter varies between 3,000 and 4,000 euros include Lagos, Vila do Bispo, Aljezur, Lagoa, Albufeira, Tavira, Castro Marim and Silves. All of these municipalities, except Tavira and Castro Marim, are located in the western part of the Algarve (Barlavento).
The western part of the Algarve has the highest concentration of foreign residents, between 20 and 26% of the population. This subregion is surrounded by the ocean on two sides, which means numerous beaches and therefore a high interest among tourists, both Portuguese and foreign.
The quarterly changes in these eight municipalities can be described as moderate growth. The municipality of Silves had the highest quarterly growth rate, 4.56%. The only exception in this group was Vila do Bispo, where values decreased slightly. Over the year, prices in all these regions increased, at a small and moderate rate. The leaders were Lagos (9.9%) and Silves (10.3%).
Rounding out the list is a group of 5 municipalities with an average price per square meter between 2,200 and 3,000 euros. Of these, Portimão and Monchique are in the western part of the region, while Castro Marim, Olhão and São Brás de Alportel are in the eastern part. Most of these municipalities have seen a moderate increase in the cost per square meter of housing in the last three months, ranging from 0.92% to 3.2%. The exception was Monchique, where the price, on the contrary, decreased by 3.25%. In terms of the year, prices rose at an average rate (5.9% to 7.4%) with 2 exceptions. In the municipality of São Brás de Alportel, the growth rate was 14.7%. Monchique, on the other hand, experienced a decrease of 1.2%.
Are Idealista.pt's statistics to be trusted accurately?
Idealista.pt statistics are based on prices from real estate offers published on the same website. However, it is worth realizing that this data does not cover the entire market. In some situations, properties may be sold without being listed on Idealista, although in the Algarve region such cases should be rare. You should also be aware of possible differences between the prices quoted in the listings and the actual transaction amounts.
Just about the value of real transactions can be found in the report of the National Institute of Statistics of Portugal (INE). At the moment, the most relevant is the price study for the first quarter of 2024 (January - March). By comparing the prices for this period from both sources, we will be able to determine how true Idealista reflects the current real estate market situation in the Algarve region.
The table presents data on the average cost per square meter of real estate in real sales transactions, obtained from the report of the National Institute of Statistics (column 1). The average cost per square meter according to advertisements on Idealista.pt (column 2), as well as the percentage difference between these values (column 3) 3). The municipalities in the table are arranged in descending order of the average cost per square meter according to the Idealista website.
In all the municipalities compared, the value of the property at transaction was lower than that indicated in the listings on Idealista.pt for the same period. The difference varies quite a lot, from 3.20% in Portimão to 27.6% in Vila do Bispo. In the most expensive municipality, in Loulé, it amounted to 22.02%. The municipality of Castro Marim is completely out of this range, where the difference between the average prices from the 2 sources amounted to 48.95%!
There are many factors that can explain significant discrepancies between data from different sources. However, to assess the current state of the market, we will still rely on information from Idealista.pt, as it provides the most up-to-date data. When using information from Idealista.pt, it is important to remember that the prices quoted only reflect the sellers' intentions. Those who plan to haggle when buying real estate, it will be useful to contact an experienced real estate agent in the Algarve. A specialist familiar with the peculiarities of the market will be able to assess the possibility of successful negotiations to reduce the price.
Long and medium term rental properties in the municipalities of the Algarve
Again we turn to the statistics of the Idealista.pt website.
The table shows the average prices per square meter of rented accommodation, collected from the advertisements on Idealista.pt (columns 1-3). Column 4 shows the percentage evolution of prices over the last three months, while column 5 shows the changes over the past year. At the beginning of the list is Faro, the capital of the region, after which the municipalities are arranged in descending order of average price per square meter in July 2024. The list of municipalities here is shorter than for sales.
As well as in the case of sales, Faro, although being the capital of the region, is not a champion in terms of rental costs. In July, a square meter there cost 12.7 euros, which was the result of a quarterly decrease of 1.55% and annual growth of 13.7%.
The highest rental rate was in Loulé (16.8 euros per square meter), which was the result of a remarkable quarterly growth of 5.99% and an impressive annual growth of 14.8%. In terms of annual growth rate, Loulé comes second after Olhão, where the rate reached 19.2%. Most of the other municipalities experienced price increases over the year, but they were less pronounced.
The only municipality with an annual decrease in the price per square meter was Lagos (-1.6%). For the municipality of Silves we cannot determine the annual growth rate. Most likely, there were no rental listings in this municipality on Idealista last July.
Daily rentals in Algarve municipalities
The Algarve has traditionally been perceived as an ideal summer vacation destination, but things change dramatically in the off-season. In winter, life in the region slows down and many tourist businesses close, making a stay here less attractive to some. Tourist traffic in this region continues year-round, but there are far fewer tourists in the winter. Property owners in the Algarve who are not happy with the change of pace of life may only spend part of the year there and rent out their properties to tourists the rest of the time, making the management of rental properties a sought after and profitable business.
It is possible to determine the potential income from tourist rentals with the help of various online services. We use a free version of one of these tools called All The Rooms. This service provides information on the average price per night for all Airbnb accommodations, as well as the number of such accommodations in a particular region. Below is a summary of the data from May 13 to August 13, 2024.
The All The Rooms service provides information about the average price in a slightly different way than we have studied before. It does not operate with average prices per square meter, like Idealista portal. Instead, it provides information on the average price per night of tourist accommodation across all properties in a selected area. The properties can be anything from luxury villas to small rooms. This data, although limited, can help in assessing the potential profitability of short-term rentals.
As with both sales and long-term rentals, Faro, the capital of the region, does not rank at the top of the list in terms of either the number of tourist accommodation facilities or the price per night. In fact, in terms of the price of rent per night, which is 115 euros, this city is in second place from the end.
In summer 2024, the highest prices per night were characterized by Portimão (220 euros), Monchique (203 euros) and São Brás de Alportel (184 euros). While the lowest rates were recorded in Vila Real de Santo António (111 euros) and Aljezur (117 euros). The largest number of daily rental properties are located in the municipalities of Albufeira (10,676), Lagos (6,152) and Portimão (5,132).
The most expensive and cheapest properties available in August 2024
The Idealista.pt website currently has 12,294 listings for houses for sale. The condition of these properties varies greatly, from houses that are under construction and even in the planning stage, to ruins that require complete renovation. Only properties that can be moved into immediately after purchase are included in this review.
The most expensive residential houses in the Algarve
27,000,000 euros Luxury villa built on the site of a XVI century fortress. The area of the building is 938 sq.m., the area of the plot is 3.203 sq.m. 8 bedrooms and 9 bathrooms. The property is equipped with a large hall, dining room with panoramic windows, spacious kitchen, private chapel, spa area with sauna and massage room, barbecue area. There is a garage and parking. There are breathtaking views of the sea, bay and city. Class C energy certificate. Lagos municipality.
24,000,000 euros Villa with 7 bedrooms and 7 bathrooms. The plot of land is 0.35 hectares. The area of the house itself is 1.000 square meters. The house is built in 2022. The property has a swimming pool, garden, garage. Municipality of Almancil. There is no energy efficiency certificate. The photo of the house is not in the public domain. We saw this ad in last quarter's price survey.
24,000,000 / 19,975,000 euros Another villa, about which, by the way, there are several ads with very different prices. The area of the house is 1.500 square meters, the area of the plot is 2.906 meters. 6 bedrooms and 8 bathrooms, living room with suspended fireplace, kitchen with SMEG appliances, recreation area. The master bedroom with dressing room and bathroom is on the second floor. Additionally, there is an elevator, sauna, Turkish bath, cinema, and indoor swimming pool. The villa is located 3 km from the beach and 20 km from the airport. Energy efficiency certificate B. Almancil municipality. This is an option we have seen in some past reviews of property prices in the Algarve.
19,000,000 euros Villa built in 2004, located on the beach, by the bay. It has an area of 740 meters, plot of 7.670 meters. 7 bedrooms and 7 bathrooms. Heated swimming pool, terraces overlooking the ocean, underground floor with recreation area, sauna and garage. Energy efficiency class D. We saw this property in a review from the previous quarter. Municipality of Albufeira.
The cheapest homes that you can move into right away without major renovations
50,000 euros Rustic cottage with an area of 28 square meters. It has 1 bedroom and 1 bathroom. Built in traditional style. The nearest beach is 27 km away. No energy efficiency certificate. Municipality of Alcoutim.
62,500 euros Another rustic house, this time with an area of 40 square meters. It has 2 bedrooms, 1 bathroom with shower, a living room with fireplace and a fully equipped kitchen. The property also includes a terrace and a traditional oven for cooking outside. There is no energy certificate. Municipality of Alcoutim.
64,900 euros The studio house is 21 square meters in size. Bathroom with shower, kitchenette with fridge and dining table, and sleeping area with double bed. The house is in a typical rustic style and is suitable for vacation, investment or permanent residence. Fresh renovation inside. There is no energy certificate.
80,000 euros (it says it used to cost 100,000 euros) Another village house with a total area of 92 meters. It consists of two reception rooms, a bedroom, kitchen, bathroom with shower, hallway and utility room. The property is in good condition, however the owner may need to carry out some minor repairs as tiling may not be to everyone's taste. There is no energy performance certificate available.
89.000 euros The house of 52 square meters consists of two bedrooms, living room, kitchen and bathroom with shower. It was built in 1970 and partially renovated. A heating stove is present, as well as two outbuildings. The plot area is 960 square meters. There is a terrace with a stove for cooking outside. Electricity and wifi are available, water from a well with filtration. There is no energy efficiency certificate. Municipality of Monchique.
The Idealista website also offers 10,440 apartments for sale. Let's take the T1 layout (apartments with a living room and a separate bedroom) as an example. In the following, we will refer to them as one-bedroom apartments.
The most expensive apartments
1.350.000 euros Elegant one bedroom duplex apartment in a prestigious complex. It has a total area of 142 square meters. On the first floor there is a kitchen with modern appliances, living and dining room with access to the terrace and a bathroom with shower. On the second floor there is a bedroom with a spacious bathroom and another terrace overlooking the pool and the sea. The price includes a parking space and a separate storage room in the underground garage. The property is a 5 minute walk from the beach. The energy efficiency class is not specified. The apartment is currently reserved by a potential buyer.
1,275,000 euros One-bedroom apartment of 263 square meters. Garage space is included in the price. It has a sea view from the windows. Has a license for short-term rentals, which provides an income of over 8% per year. The apartment has three bathrooms, an extra space that can be used as an office or second bedroom and a spacious basement. The property is in good condition and is air-conditioned. Energy efficiency certificate A. Municipality: Albufeira.
975.000 euros Apartment of 89 square meters. Two bathrooms, terrace with sea view. Living room with fireplace, fully equipped kitchen and bedroom with fitted closets. Air conditioning and central heating installed. Energy certificate class D. The apartment is within walking distance to the beach and restaurants, with access to the resort infrastructure including swimming pools and playground. Municipality of Almancil.
Cheapest studio apartments in the Algarve
125.000 euros Area 77 square meters: 61 meters of living space and 16 meters of terrace. Fully furnished, equipped with air conditioning, kitchen with stove, oven, hood, microwave and dishwasher. Bathroom with shower. The apartment is located in a hotel complex with a swimming pool and gym. There is a possibility to rent it out. Energy Performance Certificate B. Municipality: Monchique.
130.000 euros Apartment of 65 meters. Equipped and furnished, with license for tourist accommodation. Inside there are: one bedroom with built-in closet, bathroom, living room with dining area, kitchenette and terrace with city views. The house has air conditioning. Class C energy certificate. The property can be purchased for personal use or for rental income. Close to restaurants, stores, supermarkets and beaches. Municipality: Albufeira, city center.
139,500 euros Apartment in a normal house (not apart-hotel). Area 44 meters. In excellent condition, fully equipped and furnished. Located on the 4th floor in a building without an elevator. Open space kitchen, living room, bedroom with fitted closets and bathroom with bathtub. The apartment has a private terrace of 30 square meters with a stone stove. Close to Aldi, LIDL, Continente and Pingo Doce supermarkets. Energy certificate class C. Municipality of Vila Real de Santo António.
What conclusions can be drawn about the Algarve real estate market this summer
To summarize, the Algarve remains attractive to both local property buyers and overseas investors. Although demand may vary from season to season, the continued rise in property prices is testament to the continued interest in the region.
This quarter, the Algarve market has seen new offerings in the luxury real estate segment. Some luxury homes that we saw in the previous quarter may have already been sold and therefore are not featured in the current listings. However, those properties that we reviewed many months ago have reappeared in listings, which may indicate that they are having difficulty selling. Before investing in expensive real estate, it is important to think carefully about how you will sell it in the future.
At the same time, many more affordable properties have entered the market. However, given their location in remote rural areas, these options are probably not of investment interest. The exception may be those potential buyers who already have an apartment in the Algarve, such as Albufeira, and are looking for an occasional break from city life in the countryside.
An additional aspect of the specificity of prices in the Algarve is the very large difference between the asking and actual selling prices of properties. This factor emphasizes the importance of careful assessment of the market value of properties. Potential buyers should conduct a detailed market analysis and carefully select offers for purchase.
The market is still developing, and it is advisable to seek professional advice for a successful investment. At WithPortugal.com you can find an experienced real estate agent in the Algarve to assist you in the selection and purchase of real estate, as well as tourist rentals.
We hope you found this material useful. Don't forget that on our blog you can find articles about any aspect of life in Portugal!
