If you’re considering buying a home in Portugal in 2025, you’re not alone. Portugal continues to attract international buyers thanks to its charm, affordability, and lifestyle. But before you dive into the property market, there are several crucial factors you should be aware of.
In this guide, Savvy Cat Realty walks through the most important things to consider, from political influences and financing options to construction timelines and tax incentives.
1. Portugal’s Housing Market: Current Climate
Portugal is currently experiencing a housing crisis, primarily driven by a high level of demand. With around 11 million residents, including approximately one million legal expats, competition for housing—especially in popular regions—is fierce.
The real estate market in Portugal is often not very transparent or well-organized, which can lead to expats unknowingly overpaying for property.
Savvy Cat Realty was created exactly to help expats navigate the Portuguese real estate market and to empower buyers with local insights and avoid costly mistakes.
If you’re looking for guiding experts who will assist you in every step of the way, you’re in the right place! Contact us today at contact@savvycatrealty.com
2. Financial Support for Young Buyers
One significant update for 2025 is the government’s initiative to help young residents purchase homes. If you’re under 35, reside in Portugal, have your taxes in order, and meet bank requirements, the state may act as a guarantor for your home loan.
This means you could qualify for a 100% mortgage, with the state guaranteeing up to 15% of the property value in case of default. However, all standard financial qualifications still apply, including proving that your monthly mortgage payment doesn’t exceed 35% of your household income.
3. New Construction: Benefits and Risks
New properties in Portugal are particularly attractive to foreign buyers. However, most new developments are sold during the construction phase—often before completion.
While all new constructions carry a 10-year builder’s warranty, delays are extremely common. Most projects are delayed by at least three months, and some drag on for over six. You can try to include protective clauses in your contract to mitigate delay penalties, but not all developers agree to them.
So, while new construction offers modern features and structural guarantees, it’s not ideal if you’re looking for a quick move-in.
Are you considering a new construction project and want expert guidance? Reach out to us at contact@savvycatrealty.com—our team will thoroughly assess your project and help you move forward with confidence!”
4. Buying an Older Home and Renovating
If time is of the essence—or if you’re seeking character and customization—buying an older home and renovating it can be a fantastic choice.
Many renovations don’t require complex licensing as long as structural changes aren’t involved. You can update flooring, kitchens, bathrooms, insulation, and even windows, provided you maintain the property’s external appearance. This process only requires a simple notification to the town hall, called a “Aviso Prévio”
Keep in mind that renovations may face delays too, but usually not as extensive as new builds. Plus, you get to design a home that truly fits your taste—often at a better cost-quality ratio.
5. Building From Scratch: A Long-Term Commitment
Thinking of buying land and building your dream home? Be prepared for a long wait.
Obtaining the necessary building permits in Portugal can take anywhere from six months to over a year—depending on the municipality. In reality, the entire process from planning to completion often spans 2.5 to 3 years.
If you already own a plot, that’s a head start. But if you’re starting from zero, building is the slowest option and should be chosen only if you have flexibility in your timeline.
6. Know Your Plot Types
When buying land, it’s essential to know what kind of plot you’re dealing with:
- Urban plots are fully buildable based on local planning regulations.
- Rural plots generally cannot be built on unless they have a pre-existing ruin, and even then, it involves significant bureaucracy.
- Mixed plots contain both buildable and non-buildable sections. You can only construct on the part officially designated as urban.
Make sure to check the official zoning designation before making an offer.
7. Urban Rehabilitation Areas (ARUs)
Many cities have designated Urban Rehabilitation Areas (ARU)—zones aimed at encouraging property recovery. If you buy a home within an ARU zone:
- Your first transaction is exempt from IMT (property transfer tax), which can otherwise cost tens of thousands of euros.
- You may benefit from reduced VAT on construction services, potentially dropping from 23% to as low as 16%.
These incentives can make investing in older properties significantly more cost-effective.
8. Energy Efficiency Incentives
Portugal occasionally offers state grants to improve a property’s energy efficiency—think better insulation, solar panels, or smart heating systems. Properties are rated from F (least efficient) to A+ (most efficient).
These grants are competitive and limited in funding, so while they’re a nice bonus, don’t count on receiving them as a certainty.
Should You Wait to Buy?
Many speculate about a possible housing market crash. However, prices in Portugal are still climbing, and demand remains strong. Waiting for a crash may lead you to miss out on opportunities altogether.
Need Help Navigating the Market?
At Savvy Cat Realty, we offer full-service support — from lawyer assistance and engineering checks to negotiation and background checks for new developments. Whether you’re buying, renovating, or building, we tailor our services to your specific needs.
Contact us at contact@savvycatrealty.com for transparent information, free resources. You can also book a free consultation with us: https://savvycatrealty.com/product/free-clarification-call/
