Those thinking of buying a house in the Algarve would do well to invest now, as Moody’s confirms in a new report. According to the credit rating agency, property prices in Portugal are expected to rise by at least 4% next year.

Figures over recent years have shown an ongoing increase of property prices in Portugal. Now, the national bank, Banco de Portugal, has recognised that the Portuguese real estate market shows signs of overvaluation.

More foreign buyers, along with national economic growth (see more here) and low interest rates on mortgages, have been identified as the main drivers of the current real estate reality. Banco de Portugal has now warned banks that the low interest rates practised, which have been favourable for buyers, could quickly take a turn for the worst.

However, Portugal is not alone. In the report released by Moody’s, the expected increase of national house prices place the country in fourth in the European ranking. The largest increase is expected to take place in Spain (5.5%), followed by Ireland and The Netherlands (both 4.5%) and then Portugal, on par with Germany (4%).

The data comes after Portugal saw a record-breaking year for tourism (see here) and picked up a bevy of awards, including the award for World’s Leading Destination at the World Travel Awards for the third time last month (read more here).

For expert advice on buying a property in the Algarve, please contact the team at Algarve Home Sales here. You can also click here for further information on the Portuguese buying process.