Since the crisis, property prices have fallen by an average of 30%. In 2005, for example, 300,000 property transactions were recorded, but by 2013 this had fallen to just 100,000. As a result, prices have fallen considerably, and even more so on the outskirts than in the city centers of major metropolises. Today, prices are stabilizing.
Possible financing by local banks
As Portugal is part of the European Union, a French citizen can borrow from a local bank to purchase a property. Moreover, when the target property is owned by the bank, it can sometimes be financed at 100%, whereas, generally speaking, the loan rate is more advantageous when the buyer makes a downpayment.
But be prepared for high costs, as banks often require proof of income translated by an official, embassy-approved translator.
In Portugal, mortgages are generally variable-rate. So before committing yourself, it's essential to understand how your monthly payments are indexed. In most cases, they are indexed to the EURIBOR index, i.e. the average lending rate of the 50 largest European banks.
When EURIBOR rises, so do the borrower's monthly repayments. However, some contracts include a clause allowing the bank not to adjust the monthly payment if the index falls. It is therefore essential to pay close attention to this type of clause.
An advantageous tax system
During the crisis, the Portuguese government had to implement an austerity policy in order to obtain financial aid from the European and international community. Consumption plummeted, and the banks were unable to find buyers for their housing estates. They therefore called on foreign capital to sell off their real estate stock. This is why, since January 1, 2013, European private-sector pensioners moving to Portugal for the first time are exempt from paying tax on pensions received in their country of origin.
In this way, the government expects to inject "fresh" money into the local economy to help kick-start it.
For the record
The cost of living in Portugal is 30 to 40% lower than in France. The purchasing power of retirees with an average pension is therefore much greater. That's why investing for retirement in Portugal can be, for example, an opportunity to buy a small house, which you can then rent out while you pay off the mortgage.
