Cheap Portugal Property

Country:  Portugal

They say the best things in life are free but we all know that's not strictly true, don't we? Admittedly, in Portugal you'll find some great freebies: the sun that shines down will be free, the sparkling seas will be gratis to all visitors and the special warmth and ambience that Portuguese society offers won't cost you a thing. But without forking out on a holiday or buying a property there you'll be hard-pressed to enjoy any of the great free stuff the country has to offer.

And with  prices of Algarve property spiralling up all the time, it looks as though more of us might have to miss out on the Portuguese dream. Well, according to several experts in the area that isn't necessarily the case. There are pockets of Portugal where property comes in at less than £80,000 and that even includes parts of the Algarve.

"Certain areas are astronomically priced but that's not the whole story," says Robert Pierce of The Property Finders' Portuguese office. "Large areas are very competitive and you can buy at ridiculously low figures." He cites north Portugal as one such area, where he claims ruined estate houses with vineyards can be picked up for under £100,000 in a location "that's like the Algarve was 20 years ago".

Of course, there are disadvantages to such a bargain. Pierce points out that you will have to spend a lot of money getting a ruined property into a decent state and he also claims the winters in the north of the country can be fiercely cold, in comparison to the balmy weather of the Algarve. "Unless you're looking to take a risk I feel you should look at the Algarve," he says.

That's all very well, but in an area that commands prices of between €250,000 (£165,000) and €500,000 (£330,000) as standard, where do people on a budget start? Pierce advises skipping the central resort-strewn strip of the south coast and heading either west and looking at Lagos property, or east and Tavira property. "The west is relatively undeveloped," he says, "the road to the airport only opened two and a half years ago and cut the journey time to 45 minutes. The area is late to the enter the market compared to the central Algarve region, with prices a quarter of what you would pay there, but there has still been massive appreciation of around 30 to 40 per cent in the past two years."

Pierce works for clients as a finder service, rather than as an estate agent, and has access to property from a variety of sources. When asked to find property that came in under £80,000 he quickly rustled up a cute cottage in the village of Almadena. It's near Burgau, one of the Western Algarve's popular beach resorts and the Parque da Floresta golf course, has two bedrooms, two bathrooms and costs just €97,000 (£64,000), which Pierce says is "typical" of the kind of thing that can be found in the area.

Also available is a six-year-old, two-bedroom, ground-floor apartment near popular Praia da Luz for €120,000 (£79,000) and another attractive apartment with two bedrooms in Praia da Luz itself for €123, 250 (£81,277). The property is in a pretty development two minutes from the beach and with access to communal pools and tennis courts.

On the other side of the Algarve coast, Pierce finds a couple of properties that also fall within the £80,000 range including a three-bedroom, 50-year-old townhouse in need of restoration for €57,500 (£38,000) in the town of Olhao and, for the more faint-hearted buyer, a brand new apartment in Moncarapacho for €110,000 (£72,500).

Pierce says that as well as providing good-value property options the West and East Algarve could be sensible buys in the long term. "These areas will also provide the greatest capital appreciation, due to current government restrictions on new planning permissions to protect the environment and the natural beauty of the Algarve."

One interesting thing he points out is that within Portugal there is often a system of pricing that effectively makes it two-tier for buyers, with property often being offered to overseas investors at prices that are up to five times higher. This why working with a consultant who understands the local market well and can get you in on the ground floor can be such an asset.

Further north, in the Alentejo region, Kirstin Honeywill of Portuguese Homes claims property hasn't been moving quite as fast as that on the Algarve because the area is still relatively unknown. Nevertheless, prices aren't as cheap as they used to be with decent property selling for around €200,000 (£132,000). Honeywill says that for a farmhouse with a couple of acres of land in need of total renovation buyers should typically expect to pay between €90,000 (£59,500) and €140,000 (£92,500). "For less than £80,000 you can buy small plots in towns and villages (up to 500 square metres) with permission to build a new house, usually terraced. Alternatively, there are new-build small houses and apartments in the towns further inland."

Currently on Honeywill's books are several plots with permission for building priced from €50,000 (£33,000) and a partially renovated, two-bedroom cottage with patio garden for €105,000 (£69,000). For €79,000 (£52,000) there's also a ruined, traditionally built house that would need to be completely restored but also offers 1.5 acres of land. For those with just a bit more to spend there's a pretty rambling farmhouse complex on three acres that needs renovation but could be lovely for €125,000 (£82,500) and a fully renovated property, beautifully finished, for €135,000 (£89,000).

Honeywill says that most of her buyers are looking for a holiday home that can double as somewhere to rent out for a bit of extra income, in particular nice resale properties around 45 minutes from the coast and with close proximity to a village or town. The area is able to provide around 12 weeks rental a year but Honeywill predicts this will lengthen once the several golf courses that are planned for the area open. Average yields, she says, are around three to five per cent "depending on how much effort the owner puts into promoting the property".

Honeywill adds that much of the cheaper properties are ruins but that people can often see their potential and she explains that there are more opportunities to buy on a budget if you're prepared to travel. "Generally, the further inland you are the cheaper the property will be - there are village houses available for €60,000 (£39,500) an hour inland."

This view is backed up by Titia Thomason of Rustic Portugal who claims that there are lots of budget properties available for those prepared to look in rural areas and willing to put in a bit of work on their new home. Her listings currently include a total restoration project for €25,000 (£16,500), a large and partially renovated country property with 5,000 square metres of land for €95,000 (£62,500) and a stone cottage with outbuildings and land for €85,000 (£50,000).

However, she says the dream and the reality don't always coincide and seeing these kinds of cheaper properties often makes buyers think twice. "I get the impression that a lot of people think they want an old Portuguese-style property, but when they come for a viewing they prefer a modern house," she says. "However, they're prepared to settle for an old house when they can't afford the price of the other. The average price of a ruined farmhouse in our area is €75,000 (£49,500)."

Of course, if you really have your heart set on being in the centre of things there's no reason why you can't buy a low-cost pad in the central Algarve - just don't expect anything approaching luxury standards. Connie Vitto of Quadrant Property says it's a difficult but not impossible task. "On the Algarve £80,000 will buy you a one- or two-bedroom apartment. It would also buy you a typical Portuguese village house with patio garden in a village community, often in need of refurbishment."

Vitto has several options on her books including Ocean Terrace, a complex of well-designed apartments currently under construction in the resort of Armacao de Pera just west of Albufeira. One-bedroom properties within walking distance to the beach start at €110,000 (£72,500) and, as well as having quality interior fittings, the apartments have a rooftop terrace complete with pool, lounging area, spa tub and children's play area.

Another option recommended by Vitto is buying a quarter share in an upmarket development offering good facilities, such as the one she is offering in property situated at Pestana Golf Resort in Carvoeiro. "It's an excellent way of investing in a luxury property on a golf resort if you don't have the capital and don't want to burden yourself with a mortgage or if you're only going to use it for a few weeks of the year," says Vitto. Ownership this way at Pestana allows 13 weeks' personal use per year of a two-bedroom apartment with access to communal facilities including two 18-hole courses for €75,000 (£49,500).

So, if all you're looking for is a place to call your own while you soak up the Portuguese sun, dare to dream - those budget properties are definitely out there.

First published in April 2007.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.

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