Since the crisis, real estate prices have fallen by an average of 30%. In 2005, 300,000 real estate transactions were recorded, but only 100,000 in 2013. As a result, prices have fallen considerably, and even more in the suburbs than in the city center of major cities. Currently, they are stabilizing.
Possible financing by local banks
Portugal being part of the European Union, a French citizen has the possibility to borrow in a local bank to acquire a property. Moreover, when the targeted property is owned by the bank, it happens that it can be financed at 100% whereas, generally, the loan rate is more advantageous when the buyer makes a contribution.
However, be prepared for high fees, as banks often require proof of income translated by an official, embassy-approved translator.
You should also be aware that in Portugal real estate loans are generally at variable rates. Therefore, before committing yourself, it is essential to understand how the monthly payments are indexed. Most often, they are indexed to the EURIBOR index, i.e. the average of the loan rates at which the 50 largest European banks lend to each other.
When the EURIBOR increases, the borrower's monthly payments also increase. But in some contracts, there is a clause allowing the bank not to adjust the monthly payment in case of a decrease of the index. It is therefore essential to pay 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 then fell sharply and the banks could no longer find buyers for their housing estates. They therefore called on foreign capital to sell off the real estate stock. For this reason, 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 revive it.
For the record
The cost of living in Portugal is 30 to 40% less expensive than in France. The purchasing power of retirees with an average pension is therefore much better. This is why investing for retirement in Portugal can be, for example, the opportunity to buy a small house, which will be rented out while the mortgage is being repaid.
