Portuguese property prices set to rise further

Residential property prices in Portugal are expected to keep on rising, with experts forecasting growth of about 4% this year, after increasing by just over 7% in 2016.

Property experts speaking to Portuguese newspaper Diário de Noticias said they expected a rise in foreign investors to place upward pressure on property prices, along with greater buying power among Portuguese, supported in part by less stringent mortgage lending conditions.

Fresh figures also show that last year was the fourth year in a row in which there was an increase in property sales in Portugal, with the value and number of deals up 18% on 2015.

House price growth in Portugal is being led by Lisbon, particularly in the city centre, where the average price of a home rose by around 10% during the second half of last year.

According to figures by the Confidencial Imobiliário index, prices in the older part of the Portuguese capital rose by 19% overall last year when compared with 2015.

A total of just under 2,300 properties were sold in this area last year at a total cost of around €700m (£603m), which works out at an average of approximately €305,000 (£262,500) per property.

Buy-to-let investors buying property in this part of Portugal can typically expect to achieve a gross rental yield of about 5%.