This is the ultimate question at the moment for everyone who has to do with real estate, buyers, sellers, tenants, landlords or even the real estate professionals, the brokers, what should they say at this interest rate on the real estate market at the moment. What are the advantages and disadvantages, and what are the references and facts? Whether you should rent or buy reaches new dimensions.

Many people are increasingly insecure. But I can't put anyone off and tell him what's right or wrong in his personal situation. After all, there is no universal "right or wrong" when it comes to the question of whether buying or renting is now the wiser choice. Rather, three factors are important for this decision.

The first factor is what you expect! "The Real Estate Illusion"

If you dare to take a look at the real estate markets, you will see exorbitant price increases in almost all locations in Portugal and other countries until recently. Due to the increased prices and the increased interest rates, buying real estate today seems almost impossible.

This is more of an illusion. Because inflation and rising salaries, as well as the cheap money from the banks in recent years, have made buyers experience an illusion like the magician, i.e. real estate was bought that did not correspond to the actual wallet at all, with room for work out, one for the home office and another for hobbies and a children's room for each offspring. This created a spiral of expectation of the normal standard, which is now experiencing a correction.

The current higher interest rate is part of a cycle value. Eventually, purchasing power also increased and money lost more and more value, but not the property.

The second factor is the spectre of high-interest rates! "High-interest rates make it more difficult to buy"

For a long time, real estate was affordable for everyone due to the zero-interest rate policy. As interest rates rose, the number of first-time buyers decreased. Buying a property is, and always has been, dependent on the expense of loan instalments and is not as affordable today as it was two or three years ago.

In addition, it has become essential to differentiate between owner-occupied and rented property: Those who do not want to rent out must now bear the higher interest burden themselves. In the meantime, however, only people with a high income or sufficient equity can do this. There are enormous opportunities for them in the current real estate market.

The third factor is equity: "Requirements must be met”.

Whether renting or buying a property is worthwhile depends on the equity you have: If you have equity, the real estate market currently offers attractive options. So, it can be especially important to buy now and get the money back later, for example via a loan.

Nevertheless, the calculation between the purchase on credit and the rent shows that from a pure asset point of view, in the monthly view, the purchase of real estate for one's own use is currently not more sensible, but more expensive but more lucrative overall.

However, if you buy and then rent out the property, you will get most of the interest back from the tax office. So, it is sometimes a clever idea to rent yourself and buy another property for rent. Depending on your income or available equity, this is currently the best way to build up your wealth.


Paulo Lopes is a multi-talent Portuguese citizen who made his Master of Economics in Switzerland and studied law at Lusófona in Lisbon - CEO of Casaiberia in Lisbon and Algarve.

Paulo Lopes