Banks in Portugal are valuing Algarve properties above their sale price, thanks to increased demand from both national and international second-home buyers, says recent data.

The Algarve has long been one of the most popular locations for non-Portuguese investors to purchase a second home. Now, the region is also attracting more Portuguese buyers looking for a holiday home on national soil. The increased demand has caused bank valuations to rise.

In keeping with data released by the National Statistics Institute (INE), the Algarve registered the highest monthly growth in bank appraisals at 2.1%, the most significant increase nationwide.

The figures reflect not only the region's historical appeal as a second-home destination for international investors, but also the growing demand from Portuguese nationals, likely an effect of the travel limitations imposed by the pandemic.

On a national scale, the average bank valuation rose to €1221 per square metre in July, a 8.3% increase year-on-year, but just 0.5% compared to June. This shows that, while the value of bank appraisals has registered successive records in the last 10 months, the current figures show a slight slowdown and a moderate recovery of the market.

Despite the rise of loan applications and the value of the appraisals, banks generally remain conservative in their assessments, although this recent data shows signs of moderate growth.

Learn more about the buying process here, or contact the Algarve Home Sales team directly for expert advice on securing your home in the sun.