Around 10 percent of the value of new loans for the purchase
of a house were allocated to foreign citizens, according to estimates by the
Bank of Portugal (BdP). This growth is explained as being due to the high
demand from foreigners for housing in Portugal and by the fact that these
buyers are now increasingly of working age.
According to a report by DN "Credit to foreign citizens
(residents and non-residents) has increased in the recent period, but continues
to have a small weight", says latest Financial Stability Report, which
also reveals that "of the value of new credit operations in 2021 and in
the first half of 2022, 10% was granted to foreign citizens". DN/Dinheiro Vivo questioned the supervisor about the nominal value of the loans in
question, but an official source clarified that "the requested information
includes an estimated component, which is why the reference in the Financial
Stability Report is a percentage and rounded to the nearest decimal
But if we look at the weight of foreigners in the stock of
housing loans granted by banks - that is, not only in new loans but in the
total amount on the banks' balance sheets - there is an increase. There was an
increase from 6.4 percent to 7 percent between the end of 2019 and June 2022.
The Bank of Portugal also notes that home loans granted by
national financial institutions to foreign citizens tend to have lower risk
indicators. The loan to value ratio (LTV) is lower and contract maturities are
More foreign buyers
This increase in home loans granted to foreign citizens
coincides with a strong appetite for national real estate. "Housing
transactions by non-residents have increased significantly in the recent
period, in particular involving buyers residing outside the European
Union", indicated the Bank of Portugal.
The Bank of Portugal concludes that this external demand has
contributed to the increase in property prices "The regional heterogeneity
of demand from non-residents, contributes to a differentiated evolution of
prices between regions. In particular, in the recent period, marked by the
increase of demand from non-residents, the growth of house prices has been more
accentuated in regions where their weight is higher and the percentage of
transactions financed by credit is lower", reads the same document.
In the second quarter of 2022, the median house price grew,
year-on-year, by 19.8 percent in the Algarve, 14.5 percent in the Metropolitan
Area of Lisbon, 11 percent in Porto and 10.8 percent in the rest of the
country. "In aggregate terms, the percentage of transactions financed
using domestic credit has increased in recent years, but remains 25 percentage
points below that observed in 2009", details the Bank of Portugal.
Reflecting a greater intensity of demand from non-residents
in certain areas of the country, the weight of credit in housing transactions
differs significantly by region. In the Algarve, the percentage of transactions
financed by home loans, in 2021, was around 20 percent. In other words, the
majority of property purchases were paid for in cash or using credit from
foreign banks. In the Metropolitan Areas of Lisbon and Porto, it represented
around 60 percent and 70 percent of the value of transactions, respectively,
reaching more than 80 percent in the remaining regions.