Spain’s Tax for Foreign Buyers Will Impact Portugal’s Market

Spain’s announcement of a proposed 100% tax on property purchases by non-EU buyers could create significant ripple effects in the Iberian Peninsula, with Portugal standing to gain or face new challenges in its real estate market.

Madrid, Spain

Redirected Demand to Portugal

The tax, intended to address Spain’s housing affordability crisis, is expected to deter foreign investors, especially from countries like the UK, who make up a large percentage of property buyers in Spain. This could lead to a shift in demand toward Portugal, a neighboring country with a similar climate and lifestyle.

Regions like Lisbon, Porto, and the Algarve, already popular among foreign buyers, could experience a surge in interest. However, this increased demand could exacerbate housing affordability concerns in Portugal, where dwelling prices have been continuously rising strongly in the past several years – increasing by about 9.2% annually from 2017 to 2023. 

Portugal’s Recent Policy Changes

Portugal itself has been reassessing its relationship with foreign property investment. In 2023, the government ended its Golden Visa program for real estate, aiming to combat rising property prices and improve access for local buyers. While this move might moderate the influx of investors redirected from Spain, the absence of a tax similar to Spain’s could still make Portugal an attractive alternative for non-EU buyers.

Broader Market Implications

While Spain’s policy aims to stabilize housing for locals, it risks destabilizing its own market by reducing demand and lowering property values. This could prompt more international investors to consider other European markets, including Portugal.

In conclusion, Spain’s bold move could reshape real estate investment patterns in Southern Europe. For Portugal, the challenge will be balancing the benefits of increased investment with the need to keep housing accessible for its residents.

#propertymarket #propertynews #propertyinvestment #realestatespain #realestateportugal #portugal #investinportugal 

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