Last Updated on 15th November 2024
After extended periods of economic and political fluctuation, Portuguese living costs have changed, as they have in most parts of Europe and across the UK. Quantifying those changes and budgeting accurately for the cost of relocating to Portugal are incredibly important when making any major decisions.
Alongside relatively recent reforms in October 2023, which removed the option of buying real estate to qualify for Portuguese residency status, and the adjustments giving local municipalities powers to decide on local property regulations, following Mais Habitação reforms to address housing shortages, expats may also find that property prices have altered, although more so in certain areas.
In this article we look at the current average living costs and property purchase prices in some of the key areas and explain how these have adjusted – while noting that personalised guidance is always valuable to ensure you have clarity about whether your plans and budget remain sufficient.
Current Average Living Costs in Portugal
In conjunction with most global economies, interest rates reached a high in 2022, hitting 8.1% in Portugal, which had a knock-on impact on borrowing costs, returns available on savings, and, of course, the prices of everyday expenditures and outgoings.
The good news is that things have become far more settled. The Portuguese Consumer Price Index (CPI) has remained fairly stable at just over 2.1% throughout most of this year with a projected average annual inflation rate of 2.3%.
Today, the cost of living in Portugal is estimated at €2,356 (£1,978) for a family of four, excluding rent, and €668 (£561) for a single person, both over the course of a month.
Living in Portugal also remains more affordable than in the UK, with average costs 29.6% lower and rental prices 24% below the British average.
Portuguese Costs of Living By Region
As always, living costs are simply national averages, and rates will vary between major cities and high-demand tourist areas, with data collated below to reflect how average monthly expenses differ across the country.
The Algarve and Lisbon remain more expensive than most quieter areas and smaller towns, whereas municipalities around northern Portugal also tend to require a more modest budget.
Much may depend on your plans, finances and any requirements in terms of proximity to workplaces, coastlines and schools, so reviewing accurate living costs in your intended destination is time well spent.
Buying or Renting a Property in Portugal as an Expatriate
Like general living costs, the more affluent and populated cities and visitor regions also attract higher property valuations and greater demand for rental accommodation, although there have been varied changes to the rules permitting short-term lets in a bid to ease pressure on the housing market.
Changes to Average Property Rental Costs
According to the most recently available data, the average price of renting a home in Portugal has increased from €15.50 to a little over €16 per square metre over the last year. Rent prices are also subject to regional fluctuations, with those averages increasing by 8.1% in Lisbon and 12.3% in Porto.
Sticking with the same locations as above, we’ve put together the current rental averages per town or city to give you an idea of the cost of renting.
Of course, if you are moving to Portugal as a professional, you may need to rent or buy in a larger city, but equally, you may find that the higher average salary covers the differentials in average rental costs.
For example, the average net monthly incomes in the higher-valued property markets in Albufeira, Cascais and Lisbon are at €1,490, €1,375 and €1,235 per month respectively, compared to €1,030 in Braga and €1,023 in Lagos.
In contrast, this may have a limited impact on the cost of living for retirees or those dependent on passive or investment incomes.
Purchasing a Portuguese Home as an Expat
Buying a home in Portugal has become marginally more costly, with average house price growth of 7.8% recorded year-on-year to June 2024. Some regions have seen more dramatic changes in their localised property markets, with a 19.7% increase in the Azores, but a more conservative 1.3% rise in the Algarve.
The current average price of buying a Portuguese property remains considerably lower than equivalent purchases in the UK, with central homes costing 39% less and more rural properties 47% less than in Britain.
Homes in Lisbon are currently selling at roughly €5,978 per square metre in the city centre, compared to €3,428 in Porto, which contrasts favourably with the pricing associated with similarly sized homes in the largest UK cities.
While purchasing a home may cost more than in previous years, it’s worth pointing out that the speed of appreciation has slowed considerably. Many believe this is due to the impacts of higher living costs, sustained interest rates, lower borrowing availability, and political uncertainty.
However, there is little doubt that the Portuguese housing market remains growth-positive and that real estate purchased in the near future is likely to continue improving in value in the coming years.
We hope this guide has provided insight into how living costs and property prices have changed and helps with your financial planning and budgeting.
If you’d like more tailored guidance or support with your relocation, you are welcome to contact our recently expanded Portuguese team or the Chase Buchanan UK Administration Centre at any time.
*Information correct as at November 2024