There are several reasons behind Portugal's continued appeal, from its attractive cost of living to its tailored tax schemes, and the resilience of its real estate sector.
Economic Recession: A Global Challenge
The global recession has had a profound impact on countries like the UK and the US, resulting in significant economic difficulties and uncertainties. In the previous year, inflation reached its highest level in four decades, and gas prices soared. Consumer confidence plummeted, and markets experienced a 20% decline. However, despite these challenges, both the United States and the UK managed to avoid a major collapse, but the future remains uncertain.
The repercussions of a recession have been felt through job losses, reduced wages, and higher living expenses. In contrast, Portugal has successfully kept the damage under control, demonstrating a more resilient economy compared to many other European nations. According to Costa Silva, the Minister of Economy in Portugal, "The dynamism of Portuguese exports could lead to an increase in national GDP of more than 3% in 2023." Portugal has never exported as much as it did in the first three months of this year. Additionally, tourism has seen significant growth, with a rise of around 14% compared to pre-pandemic times.
Portugal's Appeal: A Resilient Haven for Expats
Portugal remains an attractive option for expats looking for an improved quality of life. The country's upside can be attributed to several factors, including its stable economy, favorable climate, and impressive safety record being in the top 6 safest countries in the world. Additionally, Portugal has a reputation for its friendly locals and rich cultural history, making it an ideal destination for those seeking a more fulfilling lifestyle.
Factors Contributing to High Quality of Life
- Pleasant climate & Nature: With its Mediterranean climate, Portugal offers expats warm summers and mild winters, creating an attractive environment for those seeking comfortable living conditions.
- Welcoming locals: The Portuguese people are renowned for their warmth and hospitality, making expats feel welcome and embraced by the local community.
- Safety and security: Portugal consistently ranks among the safest countries globally, ensuring a secure environment for expats to reside and work in peace.
- Rich culture and history: Portugal's fascinating history and diverse cultural heritage provide expatriates with numerous opportunities to explore and appreciate the country's distinctive character.
- Affordable life insurance: Expatriates in Portugal benefit from the availability of affordable life insurance options, offering them financial security and peace of mind with a trusty health system.
- Strategic location: Geographically, Portugal serves as a gateway to both Europe and US/Canada, facilitating easy travel and connectivity for expatriates seeking to explore neighboring regions.
Cost of Living Comparison: Portugal vs. UK and US
One of the most compelling reasons for expats to consider moving to Portugal is the country's lower cost of living when compared to the UK and the US. On average, the cost of living in Portugal is approximately 30% lower than in the UK and 20% lower than in the US.
This allows expats to enjoy a higher quality of life, with lower living expenses, and potential savings on essentials such as housing, food, transportation and taxation.
Tailored Tax Schemes: Attracting Foreign Residents
One of Portugal's most famous tax schemes has been designed to attract foreign residents by offering significant financial benefits to qualified individuals.
The Non Habitual Resident (NHR) tax regime, which offers qualified individuals reduced tax rates on certain types of income for a period of ten years, has attracted many expatriates to the country. This initiative has proven very successful, with over 10,000 NHR residents currently residing in Portugal.
Portuguese Property Market: Opportunities and Trends
The Portuguese property market has remained resilient despite the recession, with continued growth, especially in the rental sector. Data from sources such as Idealista and INE (Statics Portugal) indicate that the Portuguese property market has maintained a steady upward trajectory, with demand for residential property remaining strong and the supply of rental properties being low, driving high yields.
In 2022, according to the National Statistics Institute (INE), the Portuguese real estate market recorded the largest increase ever recorded in house prices compared to 2022. The residential property price index is expected to increase by 12.6%, indicating a notable increase of 3.2 percentage points compared to the previous year. This increase represents the most significant growth since the start of INE's statistical series in 2009.
Families in Portugal have continued to purchase homes despite the current macroeconomic climate, to the extent that the number of sales in 2022 was the highest ever.
The resilience shown by the Portuguese property sector can be attributed to several important factors. Firstly, the country's stable economy has played a key role in sustaining the strength of the property market over the last 5 years. In addition, favorable tax schemes have attracted domestic and international investors, stimulating further growth.
Concurrently, Portugal has attracted substantial foreign investment, thanks in part to its robust tourism sector and the popularity of programmes such as the Golden Visa, which have contributed to a consistent demand for residential and commercial property.
With its growing economy, affordable cost of living and favorable tax policies, it’s no wonder British / American expats are flocking to Portugal in 2023. If you are interested in exploring the idea of living and investing in Portugal, don't hesitate to reach out to Hillforte - Real Estate & Relocation Services. Our team is on hand to provide you with expert guidance and support every step of the way.
Author: Camilla Costa (LinkedIn: https://www.linkedin.com/in/camilla-costa-9453445a/).
Financial Times - Global
Idealista - Portugal
The National Statistics Institute (INE) - Portugal