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Since its inception in 2012, Portugal's Golden Visa programme has had its champions and its critics, the most significant concern being the inflation of property prices in Lisbon, Porto and the Algarve. But is there any truth in it?

A recent research paper says there is. According to the Institute of Labor Economics, which studied the effects of 'residency by investment' schemes on the real estate market, Portugal's Golden Visa programme has significantly influenced the property market.

The first study of its kind, 'All That Glitters? Golden Visas and Real Estate' found that, while the Portuguese programme successfully attracted foreign investment, “it has also led to unintended consequences in the real estate market, including price distortions and public disapproval, particularly in urban areas like Lisbon”.

In the report published in March, authors João Pereira dos Santos and Kristina Strohmaier used the population of transactions records from 2007 to 2019 to analyse the introduction of the Golden Visa programme in Portugal in 2012.

They found that “there was a significant increase in the number of property transactions precisely sold at the €500,000 threshold, suggesting sellers strategically price properties to capitalise on the Golden Visa programme, leading to market distortions”.

The report also included a survey that indicated significant disapproval of the Golden Visa programme among the Portuguese population, “particularly among older, educated residents of Lisbon”. Reasons included housing affordability and broader social impacts.

Portugal's popular Golden Visa scheme, which until last year granted Portuguese citizenship status to non-EU residents if they invested at least €500,000 in real estate, now only applies to certain funds for eligibility.

So if the Golden Visa was responsible for market speculation, what do these changes mean for the future of property prices in the Algarve? Talk to the Algarve Home Sales team to find out more.