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13, dec 22 | Reading: 7 min

House Market Forecasts for 2023 | Casas do Barlavento


A new year begins, and with it, new funding measures in the state budget for 2023. Inflation has risen as a result of recent events such as the pandemic and the war, and the monthly budget is causing a decrease in purchasing power in Portugal. To overcome these adversities, the Portuguese government has presented several support measures. In this article, we have compiled the measures that promise to solve the problems in the real estate market.


Cover of the article: House Market Forecasts for 2023. On the right is a computer, on the left is an open agenda for December, and a notepad with the words "Real estate in 2023."

Photo by Denise Jans – Unsplash



Housing loans: What will change in 2023?


The State Budget for 2023 has already approved measures for those with a variable-rate mortgage, i.e., whose interest rate is influenced by Euribor and the rise in interest rates. This assistance will see the light of day via deductions at the source of the IRS, but for this to happen, beneficiaries must meet the following requirements:


  • They must take a loan to buy their own permanent home;
  • Their gross monthly salary must not exceed 2,700 euros.


To be eligible for this measure, you must notify your employer that you wish to benefit from this measure by submitting a declaration with the documents proving the two points mentioned above. This measure, according to the finance minister, is not a benefit but rather an anticipation. Only the following year's tax adjustment in 2024 will offset the tax adjustment. As a result, those who received an IRS refund will receive less, while those who paid will pay more.



Renew your mortgage in 2023


In 2022, the EURIBOR rate began to shift from negative to positive for those with variable-rate mortgages, reaching new highs every day. Because variable rates account for 90% of mortgage loans in Portugal, the increases mean a significant increase in monthly payments to the bank.


As a result of these increases, the Portuguese government has included additional assistance in the state budget for families whose monthly budgets are shrinking as interest rates and inflation rise.


Banks must pay attention to the effort rate in variable interest rate contracts beginning November 26, 2022. If the interest rate rises, banks must submit proposals to renegotiate the mortgage loan. Refinancing, extending the payment period, changing the type of interest rate, and loan consolidation are all options. This assistance is only available to those who meet the following criteria.


  • You have obtained a home loan to finance the purchase of a permanent home.
  • You have a home loan with a variable interest rate that is linked to EURIBOR.
  • Only applies to loans with a maximum outstanding capital of 300,000 euros.


The banks must act if it turns out that:


  • An expense ratio of more than 50% exists.
  • If the expense ratio increases by five percentage points and exceeds 36%.
  • The effort rate is higher than 36% resulting in an interest rate increase on the mortgage loan by three percentage points.


Banks' deadlines


If interest rates rise after 26 November 2022, banks will have 45 days to act and present solutions to the aforementioned cases.


Furthermore, if customers present facts indicating a deterioration in their financial situation, the decree requires banks to propose an alternative measure.


It is the bank's responsibility to monitor the effort rate and identify any signs of deterioration at least 60 days before a new interest rate assessment. The most commonly used variable interest rates in Portugal are the 3-month, 6-month, and 12-month rates.


Cover of the article: House Market Forecasts for 2023. A small transparent vase with euro coins inside and a small plant growing in the centre is shown in the image.

Photo by Micheile Dot Com – Unsplash



The energy bills could be used to calculate the effort rate


The Bank of Portugal is considering including energy bills, such as electricity and gas bills, in the effort rate calculation for later home loan acquisition. Since the beginning of 2022, electricity and gas bills had an impact on the Portuguese household. When compared to the average salary, these costs account for 10.3% of total family income expenditure; however, for families earning less than the average (between 700 and 1200 euros per month), this figure rises to 14.7%.


The recommended mortgage effort rate is 30% of the household income. When applying for a mortgage loan, the effort rate is always calculated for financial institution expenses such as personal loans, car loans, or credit cards. Energy costs may soon be factored into these calculations.


Do the following calculation to get a better idea of your effort rate:


Divide total financial payments by total household income and multiply by 100. The percentage of your effort rate is the result.


image of the article: House Market Forecasts for 2023. The image shows a lamp hanging with the light on.

Photo by Engin Akyurt – Unsplash



Stamp duty exemption

In addition to this measure, the government has approved a stamp duty exemption for renegotiations of home loans that result in an extension of the payment period or a debt refinancing. This exemption is already in force when the loan is transferred to another bank.


Early repayment

If you wanted to repay all or part of your loan, the bank charged you a commission of 0.5% of the principal. With the new measures, this commission will no longer be paid until 31 December 2023, regardless of the value of your loan.

A measure has also been approved that will allow you to use your savings to repay your mortgage early. During 2023, it will be possible to mobilize the balance of savings plans to pay loan instalments guaranteed by a mortgage on the home and permanent residence. This will eliminate the mandatory five years to mobilize this balance without penalties.


IMI tax changes in 2023


Exemption from IMI 

The properties exempt from IMI are determined by the municipalities. Remember that the revenue from this tax goes back to the municipalities and is administered by them. If your property is of municipal interest or belongs to national monuments and is therefore exempt from payment IMI, you should inform the Autoridade Tributária e Aduaneira about the registration and non-payment.

This proposal was mentioned in 2020, but was not adopted at that time. The proposal will be approved in the state budget for 2023, and the automatic exemption from IMI will be removed, leaving it up to your municipality to decide whether your property is exempt from municipal property tax.


IMI for Local Lodging

The tax IMI for local lodging properties located in urban pressure areas may be increased by up to 100% of the rate for the same year. Thus, local accommodation establishments in urban pressure areas now pay 0.7% of IMI in municipalities where a rate of 0.35% applies. If the municipalities decide to do so, they must inform the Autoridade Tributária e Aduaneira.


image of the article: House Market Forecasts for 2023. A room in a local lodging is shown, with two beds with white sheets and a rolled-up towel on the bed.

Photo by Steven Ungermann – Unsplash



Changes to the IMT exemption

This modification is applicable to those who resell the property. Previously, those who could demonstrate that they had resold one or more properties previously acquired for that purpose in the previous year were exempt from Municipal Real Estate Transfer Tax (IMT). The rules have changed and become more stringent; you must now demonstrate that you met this requirement within the last two years.

This article will teach you more about this tax.



Follow all the news on the real estate sector and learn how you should proceed to benefit from the measures presented in the last State Budget for 2023.