A couple I could easily be talking to next week: British, early sixties, cash from a sold house in Surrey, looking at villas around 1 million euros in Praia da Luz. Their question is the one almost every buyer asks me right now: “Steve, is now a good time to buy in the Algarve, or should we wait for prices to come down?”
Here is what I tell them. If you are waiting for a crash in the Western Algarve, you are probably going to be waiting a long time, and paying more when you finally move. But “prices will not fall” is not the same as “buy anything, today.” The timing question is the wrong one. The right one is whether the specific home in front of you is worth it.
Is now a good time to buy property in the Algarve, or should you wait?
Short answer: yes, if you are buying to live or to hold for years, and no, if you are hoping to time a dip. Prices in Lagos and the coastal Western Algarve are still rising, supply of good homes is tight, and the levers that would normally cool a market are not pointing down. Waiting costs you carry, currency risk, and the best listings, and it rarely rewards you with a discount.
What Algarve prices are actually doing in 2026
Lagos was around 4,449 euros per square metre in early 2026, up roughly 8.8% year on year. The wider Algarve average sits near 3,467 euros per square metre, up about 9%. So prices are climbing, but at close to half the pace of the national frenzy of a couple of years ago.
Here is the part buyers miss: transaction volumes are actually down, by roughly 9% over the past year. Fewer sales, but rising prices. That combination only happens when supply is genuinely scarce, which is exactly the case here. The Western Algarve is not building fast, and the demand that remains is concentrated on the coast. As I covered in Smarter Buyers, Stale Listings, the market has cooled on overpriced homes without softening on the good ones.
The 12-month forecast for the Algarve is flat to about plus 6%, with prime coastal stock at the top of that range. Nobody credible is forecasting a fall.
Why waiting for a price drop rarely works here
I understand the instinct. You watch the news, you see “market cooling,” and you assume a bargain is coming. But a cooling national headline and the reality on the ground in Lagos are two different things.
To get a real price drop you need either a flood of new supply or a collapse in demand. The Western Algarve has neither. Planning is slow, coastline is finite, and every year a new wave of buyers from the UK, Ireland, the Netherlands, Germany and increasingly the US arrives with the same shortlist of towns. When a well-priced villa in Luz or Burgau comes up, it moves in weeks, not months.
So the buyer who waits 12 months usually finds the same house costs more, the choice is thinner, and the euro has moved against them in the meantime.
Buy now versus wait 12 months
| Factor | Buy now | Wait 12 months |
|---|---|---|
| Price trajectory | Lagos up ~8.8% YoY; forecast flat to +6% | Likely to pay the same or more, not less |
| Choice of homes | Widest pick of current listings | Fewer quality homes, more competition for them |
| Mortgage (non-resident) | Lock in at ~3.5 to 4.5%, 60 to 70% LTV | Rate path uncertain; could rise or fall |
| IMT (non-resident) | Known flat 7.5% rate today | Exposed to any future tax change |
| Currency | Fix your budget at today’s GBP or USD to euro | Exposed to 12 months of FX swings |
Who actually should wait
I am not going to pretend the answer is “buy” for everyone. Wait if you have not yet visited the towns on your list in person, because choosing the wrong village is a far more expensive mistake than paying 3% too much for the right one. Wait if your finances are not settled, if the euro budget only works at a perfect exchange rate, or if you are stretching so far that a repair bill would hurt.
And be patient on the specific home, even in a rising market. Scarce supply is not a reason to overpay for a compromise. A tight market rewards the buyer who is ready to move fast on the right house, not the one who panics into the wrong one.
What I would do in that Surrey couple’s shoes
Get the money and the mortgage sorted first, so you can act. Spend real time in two or three towns before falling for a listing. Then buy the right home when it appears, and stop trying to outguess a market that has beaten every buyer who tried to time it for the last decade. The people who bought in the Western Algarve five years ago and worried they were “too late” are all sitting on homes worth considerably more today.
Frequently Asked Questions
Will Algarve house prices fall in 2026?
There is no clear sign of a fall. The 12-month forecast for the Algarve is flat to about plus 6%, with prime coastal areas like Lagos at the top of that range. Prices are rising more slowly than in 2022 to 2023, but slowing growth is not the same as a drop.
How much deposit do I need to buy in the Algarve as a non-resident?
Plan for 30 to 40% of the price. Portuguese banks typically lend non-residents 60 to 70% of the value, with interest rates currently around 3.5 to 4.5%. You will also want budget on top for IMT, stamp duty and legal fees.
Is Lagos overpriced compared to the rest of the Algarve?
Lagos runs around 4,449 euros per square metre, well above the regional average, but that premium is driven by genuinely scarce coastal supply rather than hype. If Lagos is beyond budget, the eastern Algarve and inland towns offer more room for the money.
Should I wait for mortgage rates to drop before buying?
Trying to time rates is a gamble. If you buy now and rates fall later, you can refinance. If you wait and prices rise in the meantime, you cannot undo that. For most buyers the home and the price matter more than shaving a fraction off the rate.
Thinking about your own move to the Western Algarve? Tell me what you are looking for and I will tell you honestly whether now is your moment or whether waiting makes sense for your situation. Book a free 30-minute call with Steve.
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