Over the past three years, many Americans developed a deep affection for Portugal. The Iberian nation offered affordable real estate, stunning coastlines, and a break from divisive U.S. politics, especially during the rise of remote work. However, a new reality is setting in, and the honeymoon phase appears to be fading.
From language barriers and bureaucratic complexities to rising housing costs due to foreign investments, some expats are finding that life in Portugal doesn’t quite match their expectations. What was once an appealing destination is losing its charm, especially after Portugal discontinued its golden visa program in February. Reports from expat services, consultants, and bloggers indicate a decline in the number of foreigners considering Portugal as their new home. For instance, Get Golden Visa, an international residency program, noted a 37% decrease in inquiries from Americans about its Portugal programs in the first quarter, and an 18% decrease for all expats compared to the same period last year.
David McNeill, the founder of Expat Empire consulting company, observes, “People who inquired about moving to Portugal last winter have mostly not followed through.”
This represents a significant shift from recent years when Portugal attracted foreign residents through its residency-by-investment program, digital nomad visas, and tax incentives. The country experienced a surge in foreign residents, reaching an all-time high of nearly 700,000, with the number of Americans more than tripling from 2018 to 2022, according to official statistics.
However, this influx of new residents strained Portugal’s housing supply, resulting in a 19% increase in home prices in 2022, the highest annual gain since 1991. Rent also saw a substantial rise, with a 43% year-over-year increase in Lisbon, reaching 1,693 euros, according to the real estate site Idealista. The higher cost of living is deterring many foreigners, particularly those unable to afford real estate in their home countries, as they plan for retirement or seek employment with lower wages.
Additionally, the scarcity of affordable housing has drawn the attention of some Portuguese citizens. In response, the government discontinued the golden visa program in February to curb the influx of foreign investment, despite the program generating 7 billion euros since its launch in 2012. Notably, Americans were granted 216 golden visas in the last year, surpassing the Chinese as the top recipients of golden visas in Portugal in 2022, according to immigration statistics.
However, Portugal’s digital nomad visa continues to be popular, allowing non-EU remote workers earning at least 2,800 euros a month to live in the country for up to five years. Within six months, Portugal’s immigration department granted 930 such visas, with Americans being the largest recipients. Additionally, the strong U.S. dollar enables Americans to purchase property in Europe and embrace a different lifestyle.
Many of the challenges faced by new residents in Portugal are typical administrative hurdles encountered when moving to a new country. Nevertheless, more expats are now considering alternative destinations. Spain and France are receiving the highest volume of inquiries, as affluent Americans seek to relocate to more developed and well-connected countries in Southern Europe.
According to US cross-border tax expert Derren Hayden Joseph, it ultimately boils down to the quality of life. People desire easy access to amenities and straightforward tax and visa systems.
Some expats, such as Jannik Hansen, a Danish blogger residing in Lisbon since November 2020, have experienced bureaucratic challenges. Despite applying for a Portuguese driver’s license two years ago, he still hasn’t received it. He and his partner moved outside the city to save on rent but are now considering leaving the country due to these frustrations.
Others, like Carrie Lane from Minnesota, abandoned their plans to settle in Penela, an inland town in Portugal, after facing numerous obstacles. Despite signing a one-year lease, her apartment never became available, and she had to find temporary housing. Dissatisfied with the healthcare she received for her chronic eye condition, Lane decided to return to Duluth.
Meredith Graham from California also faced difficulties, spending nearly $20,000 on her move to Lisbon in November. While she found a three-bedroom apartment, her application for tax incentives was denied twice, and it took her lawyer two months to get her address registered with the state.
As she put it, “It’s death by a thousand cuts,” referring to the numerous small adjustments required when adapting to life in Portugal, including unexpectedly cold winters.