Buying a house in Portugal and putting it up for rent yielded 7.3% in 2023

The economic and political context is experiencing moments of uncertainty, but there are those who have savings and are looking for investment opportunities, with real estate at the center of attention, due to the return it gives. Especially because, although the rental market was at the center of attention in 2023, with several changes triggered by Mais Habitação - such as the 2% brake on the increase in rents in new contracts -, buying a house to rent continues to be a good deal . First of all, the profitability of housing rose in the year that has just ended (but so did the risks): buying a house in Portugal to put it on the rental market yielded 7.3% in the last quarter of 2023, one percentage point (p.p. ) higher than the profitability calculated for the same period in 2022 (6.3%), reveal data from idealista, the real estate marketplace in southern Europe.

Over the past year, the gross profitability of buying a house and then renting it increased. At the end of 2023, this business yielded 7.3%, a value higher than the 6.3% recorded in the same period of 2022. Compared to the values recorded in the last quarter of 2021 (5.5%), gross housing profitability is higher at 1.7 p.p., show the same data. This happens at a time when rental homes continue to become more expensive, due to an imbalance between high demand and lack of housing supply in the rental market.

Analyzing by district capital, it is in Santarém where it is most profitable to buy a house for investment, with a return of around 7.5%. Next are the cities of Coimbra (7%), Évora (6.9%), Leiria (6.9%), Setúbal (6.2%), Braga (5.9%) and Porto (5.9% ). It should be noted that in these cities the investment risk is also greater.

On the other hand, the lowest housing profitability is obtained by owners of rented houses in Lisbon (4.6%), Faro (5.1%), Aveiro (5.5%) and Funchal (5.5%). But here, too, the investment risks are lower. For example, there is less risk of the house not being rented and of the property devaluing in the future.




Idealista data also made it possible to analyze the profitability of other real estate products at a national level. Offices offer a profitability of 9.2%, stores 8.6% and garages 5.2% in the fourth quarter of 2023.

Methodology
To carry out this study, idealista divided the sale price by the rental cost requested by owners in the different markets in the fourth quarter of 2023. The result obtained is the gross percentage of the profitability that the rental of a house provides to its owner. This data allows the analysis of the current state of the market and is a basic starting point for all investors who wish to purchase real estate assets to obtain income.

Source: Idealista