The real estate market in Portugal 2023, what’s coming next?

In an effort to curb real estate speculation (whereby anticipated profits are based on predicted changes in local market conditions rather than physical improvements or rents) the Portuguese government has recently revoked the golden visa programme and limited the renewal of existing ones. “In Visas already granted, their renewal will be made if they are real estate investments for own and permanent housing or for descendants”, announced the Prime Minister. Another criterion for maintaining the license will be when the house “is rented out”.


In fact owners of empty houses will have a deadline to rent out the property before the State enters. After this period, which has not yet been defined, the State will lease in a coercive manner. Some exemptions apply to holiday homes, emigrants’ properties, buildings belonging to people relocated for health or professional reasons and even people in rest homes. Does it mean that many ruins to be demolished or buildings needing renovation will continue to litter this otherwise beautiful landscape?


What is missing in Portugal is a tax rebate like the 110% Superbonus the Italian government passed a few years ago. The purpose was to help house owners finance the energy and seismic renovation of residential buildings, including social housing. The support was provided in the form of a tax deduction, deferred for 5 years (4 years for expenses incurred in 2022), for homeowners both residents and non-residents that carried out the renovation works.

It would take a courageous investment program on the part of the government to spur renovation works that are much needed to make buildings really efficient energy-wise. This would complement the government effort to make Portugal climate neutral by 2050. In fact, one of the priorities of this government is “to increase, by 2026, to 80% the weight of renewable energies in electricity production, anticipating the established target by four years”.

A very ambitious program in line with the objectives of the EU Commission: in May 2022 the European Commission has proposed to member states a target of 45% renewable energy by the end of the decade, with the goal of climate neutrality by 2050.

In any case, the rapid rise in interest rates and tighter credit access, the cut of some incentives for expats who invest in properties in Portugal, together with higher loan-to-income ratios are expected to reduce real estate prices between 3% (according to Moody’s) and 5% (according to Morgan Stanley).

Unfortunately, this doesn’t necessarily mean that young Portuguese couples will be able to afford residential rents easily, since EU and extra-EU “digital nomads” demand for rentals are keeping levels of rents quite high. In fact, Portugal offers a renewable 6-month residency to newcomers but only on condition that the source of income is foreign and the income is at least 4 times the Portuguese minimum wage. To this you can add the residence permit called “Portugal startup”.

The question is: who will benefit from all this?

Expats who have enjoyed a 10 year zero or 10% flat income tax are now starting to look abroad to find a place-in-the-sun offering a favourable income tax regime. And there is no shortage of choice.

Cyprus offers a maximum taxation of 5% (with a no tax area up to 19,500 Euros) , Malta 15%, while Tunisia offers all foreign pensioners 80% of their pension tax-free. In practice, pensioners who move to Tunisia pay taxes on only 20% of their gross pension.

In Italy both pensioners and investors who transfer their fiscal residence to one of the small towns in southern Italy (under 20,000 inhabitants) can benefit from the 7% flat income tax for 10 years. Locations include the following Regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia.

Under this preferential tax regime, an individual is exempt from income taxes at the normal scale on all foreign income and only pay 7%. This includes pension income, capital gains and dividends, overseas business income, rental income and Social Security.

Purchasing property in Italy is a good investment for a number of reasons. Firstly, Italy’s transaction costs are lower compared to other European countries such as Spain or Portugal. Currently, property prices are still at historic lows, which makes purchasing a property especially in art and historic centres in Italy a sound investment. Secondly, thanks to government-sponsored renovation programs carried out for the last 10 years the majority of the properties now meet higher energy-saving standards. Last but not least, Italy can boast 55 Unesco heritage sites which makes it one of the leading tourist destinations worldwide, as the country is also known for its art cities, unique scenery, its language, its opera, fashion and luxury brands. No need to mention food or the Italian dolce vita. Investors can easily find a property suiting their likes from the snow-capped peaks of the Dolomites to the orange groves at the foot of Mount Etna in Sicily. And from the rolling hilly landscape dotted with medieval villages in Tuscany, Umbria and Marche to the steep cliffs with colorful houses on the Amalfi Coast.

Taormina, Sicily

As inflation is hitting all of Europe and the cost of living in Portugal is now more aligned to other European nations (see our post ) chances are expats start considering Portugal on a par with other destinations.

Sources: Jornal de Negócios , Público, Agenzia Entrate,

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