Having the dream of a place in the sun is one thing; being able to afford it and all the associated costs linked to it is quite another. Before you head off into the sunset with your dreams of days languishing by the pool, or indeed even plans for an established home or business, take a step back, sit down and work out if your finances will stretch that far and beyond. In the light of the recently-implemented property tax reforms (1 January 2004) in Portugal, it is also vital that you weigh up very carefully your options for paying for the property in question, and seek professional advice on your own situation before you get too far down the line.

Property Prices

It is abundantly clear to anyone who has visited the Algarve in recent years that property development has gone on apace, with many more golf and leisure-type complexes, and apartment resorts than could have been envisaged just a few years ago. Despite the PROTAL legislation of the early 90s, which aimed to curb widespread construction and thus avoid the scenario of the neighbouring Spanish Costas, developers have found areas they have been able to get their digger-teeth into, and, behold, an ever-expanding array of villas! Now, of course, supply can only mirror demand, and the popularity of southern Portugal as a holiday and retirement destination has grown enormously over the past decade, leading to an increase in the number of houses required. The vast majority of these are brand new apartments and villas.

Demand has now outstripped supply in many parts of the Algarve, and with the standard of facilities and services offered on some of the luxury complexes now much higher, prices reflect quite staggering levels of increase.

To give you some ideas of prices for new property, based on property guides January 2007, see the table opposite.

And, new property elsewhere in Portugal:

Campo Real Golf development outside Lisbon offers apartments and townhouses starting at about £200,000. For your money, you also have access to the golf course, health club and spa, tennis club, golf academy and equestrian centre. Around the Sintra area, the Belas Clube de Campo is another luxury estate offering similar properties ranging from apartments from £120,000 to villas from £350,000 up to a million pounds. Similar

Praia da Luz, 1-bed apartment with balcony and pool access	£95,000
Carvoeiro, 2-bed apartment on condo with parking	£171,000
Monchique, 3-bed villa with pool	£399,000
Club Golfemar Carvoeiro, 2-bed villa on complex	£179,000
Carvoeiro, ¼ share 1-bed apartment	£57,000
Carvoeiro, linked villa 2-bed, communal pool	£207,000
Olhão, 1-bed apartment with large pool	£76,000
Cabanas, Tavira, 1-bed apartment near golf course	£114,000
Luz, Tavira, 3-bed property with pool	£235,000
Estoi, 3-bed villa with luxury pool	£553,000
Estoi, 3-bed luxury villa with pool	£474,000
Olhão, 2-bed villa with large garden	£300,000

developments can be found near Óbidos, Cascais and Estoril, the latter two being traditionally popular resorts along from Lisbon.

If you are not bothered about having your life on a developed resort complex, or closed, security-conscious condominium, you will find new flats and houses in any part of Portugal, advertised in the Portuguese press and agencies, with prices reflecting the local market.

Re-sale and older properties come in a lot cheaper, but in the Algarve, and certainly going through estate agents, prices may still seem steeper than you imagine. A 2- or 3-bedroom flat in the Algarve may cost from around 70,000 euros. Rural, typical farmhouses and rustic buildings which have been renovated will be upwards of 150,000 euros. Those needing work may be found from 100,000 euros.

You can find beautifully-restored houses around the Lisbon area – but still at a high price. For example, a recently-restored Portuguese family house in Estoril, with 3 bedrooms and a collection of other interesting rooms, but still needing some restoration was being offered at the time of writing for 700,000 euros. Once out into the real Portuguese countryside, though, and away from any tourist areas, the prices start to become much more attractive.

A couple I know who regularly buy, renovate, and sell rustic properties in central Portugal, recently had a 2-bedroom house with wine cellar for sale at about £48,000. Look around and you will be able to find properties from about £25,000. It is certainly not as cheap as buying in France, where you can still buy fairly large rustic houses in reasonable condition for quite a pittance. However, if you are prepared to put in the work of visiting less crowded places, you will be rewarded with relatively cheap houses.

Portugal magazine recently featured the Minho region in northern Portugal, and local estate agent António Barbosa had this to say about it:

Whilst property prices around Ponte de Lima have started rising, elsewhere you can still find charming rustic and town houses for very reasonable prices. And for those who really want to get away from it all, I recently spoke to someone whose friends about three years ago bought a ruin in the far region of Trás-os-Montes for around £2,000. They contracted local tradesmen to renovate it, which they did very well, and very cheaply, and they now have a marvellous bolt-hole in wonderful rural Portugal.

Statistics on house valuations, from the Portuguese National Institute for Statistics, found prices rising all over Portugal in 2002, and on average by 1.6% on the previous year. Whilst property in the Greater Lisbon area averaged 1,421 euros per square metre, up in wild Trás-os-Montes it was only 759 euros. The greatest rise in prices was seen in the Alentejo and the Algarve, where it is estimated that since 2001 prices have increased by around 30 per cent.