As with many second home destinations globally, the end of lockdowns saw an immense surge in interest in the area, which has resulted in an annual growth in sales of 25% year-to-date in the first quarter of 2024. Combined with increased interest from younger families and more buyers purchasing for year-round use, the Algarve can be a tough market for buyers with limited supply and high prices. While demand continues to outstrip supply, especially at the prime level, there have been some deliveries of new stock to help the market.

Ongoing demand for space in prime second home destinations is readily apparent in the Algarve, where average capital values have nearly doubled (+92%) in the five years since 2019. In the past year, average prices for prime properties across the Algarve have risen by over 30%.

There is significant variation in the pricing in different locations across the region. For the most well-known areas such as Quinta do Lago and Vale do Lobo, average prices per square metre can exceed €14,000, among the highest in Portugal.

Other developments average €6,500 per square metre, still €2,000 higher than the average price per square metre for the Algarve as a whole.

Increasing connectivity to the region through new direct flights from Europe and the US has contributed to a wider range of nationalities being interested in the region. Coupled with a strong dollar, there is also increased American interest in the Algarve. UK buyers are still the dominant international buyer group in the region, however, with over three-quarters of all international buyers holding British passports. Young families are also increasingly relocating to the area, attracted by the healthy lifestyle, sporting and golf facilities, cost of living, quality of properties available and growing international and growing international schooling options in the area.

While there was much initial concern in the market about the restrictions in the golden visa and Non-Habitual Residency schemes, much of this has proven to be unfounded. There remain numerous alternative visa and investment programmes which offer similar solutions to international buyers which may be even more appropriate to their needs. These schemes may affect international demand in city markets, but in the coastal residential locations, they frequently were not the main motivation for buyers.

_{Read the articles within Savills Spotlight on Portugal report below}