Why Property Buyers Are Choosing Algarve Over Spain for Second Homes

Introduction

For decades, Spain has been the go-to destination for international second-home buyers — especially Brits, Germans, and increasingly Americans. But in recent years, Portugal’s Algarve region has been quietly overtaking the competition as a top choice for lifestyle buyers and investors alike.

From better tax conditions and pricing to a more relaxed pace of life, here’s why more and more buyers are choosing the Algarve over Spain for their second home in the sun.

1. Lower Cost of Living and Property Ownership

Portugal consistently ranks as one of the most affordable countries in Western Europe — and the Algarve offers exceptional value for money when compared to similar areas in Spain.

• Lower annual property taxes (IMI)
• Lower income taxes for some expats
• Affordable healthcare and services
• More price stability in the property market

Buyers often find they can get more space, better build quality, or a better location for the same budget in the Algarve versus coastal Spain.

2. Better Long-Term Residency Conditions

Portugal offers more stable and attractive residency options than Spain — especially post-Brexit and for non-EU buyers.

• Flexible visa options (D7, D8, D2)
• Less bureaucracy
• No requirement to purchase health insurance from local providers
• Shorter residency permit processing times

In contrast, Spain’s process has become more restrictive and less flexible, particularly for retirees or digital nomads.

3. Tax-Friendly Environment for Expats

Although Portugal’s Non-Habitual Resident (NHR) regime is being phased out, the country remains more favorable than Spain for many expats from a tax perspective.

• No wealth tax
• Lower inheritance and gift taxes
• More tax treaties to avoid double taxation
• Often better treatment for foreign pensions

Spain, by contrast, applies a wealth tax, and higher overall personal tax rates in some regions.

🔗 Costs and Taxes When Buying Property in Portugal

4. English Widely Spoken

In the Algarve, English is widely spoken — not just by hospitality staff, but also doctors, lawyers, notaries, and local government officials. That’s a major comfort for buyers from the US, UK, and Canada.

While some parts of Spain offer this too, it’s less consistent outside of major tourist hubs.

5. Less Overdevelopment and Crowds

The Algarve has retained much of its charm thanks to strict planning controls and limited high-rise development — unlike the densely built areas of Spain’s Costa del Sol.

As a result, buyers enjoy:

• Quieter beaches and towns
• Lower density and more privacy
• A better balance of local culture and international community

In many ways, the Algarve offers a more authentic experience with a better quality of life — especially for those seeking peace over nightlife.

6. Stable, Transparent Property Market

Portugal’s property laws are transparent, and transactions are tightly regulated. While Spain has improved in recent years, it still has a reputation for past legal and title issues.

• All sales go through notaries
• Legal due diligence is buyer-controlled
• Property rights are well-protected

American and British buyers often find the Portuguese system more straightforward and secure.

🔗 Common Mistakes to Avoid When Buying Algarve Real Estate

7. More Relaxed Pace of Life

Finally, lifestyle matters — and the Algarve’s slower pace, safety, and welcoming communities make it especially appealing for those looking to unwind and enjoy the good life.

It’s ideal for:

• Early retirees
• Families seeking balance
• Digital nomads escaping city life
• Anyone craving sunshine without the stress

Final Thoughts

Spain will always have its appeal — but the Algarve has rapidly become a top-tier alternative, especially for second-home buyers who want better value, a gentler pace of life, and more favorable legal and tax frameworks.

If you’re weighing Algarve vs Spain for your next home abroad, it’s worth spending a few days in each — and seeing firsthand why so many buyers are now choosing Portugal.

FAQs