Buying a house in Madeira sounds like a dream come true, doesn’t it? Imagine picturesque views, the Atlantic Ocean at your doorstep, and a relaxed lifestyle. But don’t be fooled: navigating this dream can turn into quite the nightmare if you’re not prepared.
I know from personal experience that countless hours of research and some hard-earned lessons have revealed essential truths about buying property in Madeira. From steep prices to baffling cultural barriers, there’s much more than meets the eye when it comes to finding your perfect home on this island paradise.
Today I’ll guide you through seven brutal truths about purchasing real estate in Madeira. Stick around: what you learn here might just save you time and money!
Overview Of The Real Estate Market In Madeira Island
The real estate market in Madeira Island is a storm of activity with houses and flats changing hands at a super fast pace. If you’re curious about living in Funchal or Calheta, keep on reading!
Number Of Properties For Sale
Properties in Madeira are in high demand, and the number of listings reflects that. In popular areas like Funchal, finding a house or apartment isn’t always easy. For example, a quick listing check showed me that a 2-bedroom apartment in São Martinho costs around €550,000 today – over 100% increase from what it used to cost back in 2022
Moving towards Porto Moniz, properties such as a 3-bedroom villa in Seixal reach almost €1,000,000 – again, over 100% increase within 2 years.
The market here is very competitive with limited options available at any given time, since many wealthy buyers are looking for their dream home on this stunning island. Properties across regions from Calheta to Machico go fast due to tourist interest.
Regularly checking listing sites helps stay ahead of new listings before they get snapped up.
Services Available
There are several real estate agencies in Madeira. Many of these agencies offer listings with stunning views and privileged locations around the island. But be careful! Many (And to be fully honest – MOST) of these agencies can’t be trusted, especially the ones that are operated by local Madeiran or Portuguese. Why? Simply because they mostly very unprofessional, and you can almost feel how they try to squeeze every penny out of you, simply for being a foreigner. That’s why I always advice to only work with foreigners on Madeira island – you have been warned!
There are also property management services available. The same applies here – only work with property management companies who are not operated by locals. Because if you do – you will get burned. Guaranteed. The internet is full of horror stories about foreigners getting scammed by almost every Airbnb management Madeira company. So again – you have been warned!
Always check reviews and seek recommendations before committing to any service.
Popular Regions For Buying
Funchal, the capital city of Madeira, is a hotspot for real estate. At the moment, properties here can range from around €300,000 to as much as €2,000,000. I love that Funchal offers a mix of modern amenities and stunning landscapes.
The center of Funchal is always busy with activity while offering beautiful ocean views.
Calheta also stands out due to its luxurious villas and tranquil atmosphere. People often look for properties in Arco da Calheta because it combines peaceful living with easy access to beaches.
São Martinho is another great option, because it’s close to various leisure areas and schools. If you’re seeking investment opportunities or just want a picturesque home base, these regions should be on your radar!
Idealista Website
I found that Idealista makes searching for property in Madeira super easy. The website offers tools like a mortgage calculator and information on property investment. With filters, I can sort properties by type, price, size, house type, bedrooms, bathrooms, and status.
The layout is user-friendly and the listings are updated regularly. They even provide options to search for specific regions around Funchal and other parts of Madeira. Whether you’re looking for a 10 bedroom villa or an apartment with parking spaces in Prazeres, Idealista covers it all.
Brutal Truth #1: Limited Housing Options In Madeira
Finding a home here is like searching for a needle in a haystack. The demand is through the roof, leaving us with a few options and fierce competition.
The lack of new listings in Madeira is like striking out at a treasure hunt. Every time I scoured the listing websites, there were hardly any fresh properties hitting the market. It feels like everyone wants to buy property for sale in Madeira but few want to sell.
With so many people looking for their dream home here, this limitation makes it even harder to find anything worthwhile. The city of Funchal and other areas seem drained of options, making each available house feel like a rare gem you must snatch immediately or regret forever. The other option is of course to buy a property of land and build your own house from scratch.
Huge Demand
Every time I check the listings, I see the limited options in Madeira. Properties go fast here! The high demand has made it a real struggle to find that perfect 7-bedroom villa or cozy 3-bedroom apartment.
Everyone seems to want their slice of this island paradise.
The beautiful sea views and balmy climate attract buyers from around the world. Investing in a house for sale feels like racing against time with so many people interested.
Whether it’s around Funchal or quieter regions like Câmara de Lobos and São Martinho, each home offers something unique but vanishes quickly off the market.
Brutal Truth #2: Rising Property Prices
Buying a house in Madeira feels like you’re bidding against the whole world. Everyone wants a piece of this pie, pushing prices sky-high.
Property prices in Madeira can hit harder than a sledgehammer when compared to other regions in Portugal.
Let’s break it down:
| Region | Average Property Price (Per Square Meter) |
|---|---|
| Madeira | €2,500 |
| Lisbon | €3,800 |
| Faro | €2,200 |
| Porto | €2,300 |
| Braga | €1,500 |
| Coimbra | €1,200 |
So all in all, this is what we can learn from the comparison table above:
- Madeira’s property prices, while not the highest, are still high.
- Lisbon tops the chart with sky-high prices, making Madeira seem almost reasonable.
- Faro and Porto are also competitive but a tad lower than Madeira.
- Braga and Coimbra offer more budget-friendly options.
Tourism in Madeira drives up property prices, making it tough for locals and buyers alike. More tourists mean higher demand for accommodations, which leads to pricier real estate overall. With millions of tourists flooding the island year-round, demand is constant, pushing properties out of reach for many.
I’ve seen many properties offering amenities like elevators, balconies with ocean views, and easy access to transportation becoming more expensive because of the tourist influx. Areas around Funchal and other regions are particularly hard-hit by this trend.
Brutal Truth #3: Cultural Barrier
Most locals in Madeira have a very slow and laid back style of communication and approach to business, making communication tough. Imagine trying to buy a house when you can’t even get a response from the seller for weeks, simply because he’s been binge-watching his favorite TV show, and was too lazy to answer your email! Yes, this really happened.
This is something I’ve been warned about many years ago when I moved to the island. All the foreigners that live on the island, eventually come to the same conclusion: You should never expect to get a high-standard service by working with the locals, so it’s better to simply work with foreign professionals, or accept the fact that you will probably get a bad service if you work with a local.
Also, many locals in Madeira don’t speak English fluently. Communicating with property sellers and understanding all the details can become a real headache for someone who only speaks English. Hiring translators or seeking help from bilingual agents becomes vital – and there are plenty of people to choose from on the Island.
Limited language skills also make it tricky to negotiate prices or understand property documents thoroughly. Missing important details could lead to financial missteps when buying your dream home on this beautiful island.
Never Hire A Local Agent, Only Work With Foreigners
As I mentioned before, hiring a local Madeiran or Portuguese real estate agent can be like navigating a minefield. Trust me, I’ve heard countless horror stories of scams and misdealings that have wrecked many dreams of people who wanted to move to Madeira and buy their dream property.
Let’s just be very politically correct and say that most local agents “cater to their own community’s interests”, leaving foreign buyers at a disadvantage.
Here’s an actual quote by one of my best friends, who is a foreigner living on Madeira, and owns 50+ properties on the island:
It’s crazy how unprofessional the local Madeiran real estate agents and companies are. They are driven purely by their own interests, not yours. Plus they’re slow and lazy and you can never get anything done with them. There’s a complete lack of regulation and laws in this industry here to protect buyers and sellers from these scammers. Just never work with locals man. Trust me.
Working with foreigners who understand your language is essential in avoiding these pitfalls. They know the ins and outs of the market without putting you at risk. Agents from your home country can offer transparent services and keep you informed every step along the way.
Investing in a property should feel exciting, not stressful!
Brutal Truth #4: Limited Financing Options
Getting financing in Madeira isn’t a walk in the park, and you’ll need good credit to even be considered by local banks.
Buying a home in Madeira means facing some tough financing rules. Foreign buyers often need to show proof of a good credit score, and that’s no joke. Lenders won’t just take your word for it, and they will check your financial history thoroughly.
You might also have to make a larger down payment than locals do. Expect banks to ask for 20% or more upfront, which can be quite steep for many people. It’s crucial to have all your paperwork in order and be prepared to meet these strict requirements if you want that dream house overlooking the Bay of Funchal.
That’s why good credit, or a good income history, can be your golden ticket to securing financing options when buying a house in Madeira. Lenders often look for strong credit histories, and having good credit can open doors to lower interest rates.
This is key in a competitive market where every little bit helps.
People with solid credit scores may find it easier to get approved for mortgages. In a place like Madeira, where the real estate market is going crazy for the lest few years, this advantage could mean getting your dream home over losing out.
Having good credit is about giving yourself the best chance to secure favorable terms when purchasing property.
Brutal Truth #5: Additional Costs
Buying a house in Madeira comes with more than just the sticker price, and you need to be ready for extra costs like taxes and fees that can sneak up on you.
Taxes and fees can sneak up on you when buying a house in Madeira. They can quickly add up, so it’s crucial to budget for them:
- Property Transfer Tax (IMT): This tax is a percentage of the property’s purchase price. It ranges from 2% to 8%, depending on the value of the property.
- Stamp Duty (IS): Expect a flat rate of 0.8% on the purchase price. It’s unavoidable and adds to your closing costs.
- Notary Fees: These fees cover official paperwork and signatures. They usually cost between €500 and €1,200, depending on the complexity of the transaction.
- Land Registry Fees: Registering your new property ownership typically costs around €250 to €700.
- Legal Fees: Hiring an attorney to ensure legal compliance costs about 1% to 2% of the property’s value. It’s money well spent for peace of mind.
- Valuation Fee: If you’re getting a mortgage, banks require a property valuation which costs between €300 and €600.
- Mortgage Costs: Banks charge setup fees for mortgages, usually around 1% of the loan amount.
- Insurance Costs: Home insurance is often required by lenders and adds another layer of expense, costing approximately €200 to €500 annually.
- Maintenance or Community Fees: Especially with apartments like those in “Madeira Acqua Residences,” community fees can apply, amounting to several hundred euros annually for upkeep.
- Utilities Connection Fees: Switching utility services into your name isn’t free, so expect initial connection fees ranging from €50 to €150 per service.
As you can see from the list above, costs can pile up quickly, so budgeting for additional expenses is essential. Taxes and fees alone can take a big bite out of your finances. Think about legal costs, transaction fees, property valuation services, and real estate management.
You don’t want to get surprised later.
Energy efficiency also affects your budget. Higher energy costs in a less efficient 2 bedroom apartment or 4-bedroom house can add up over time. Maintenance costs and potential renovations can’t be overlooked either, especially if you’re dreaming of owning a home with stunning views or located on Estrada Monumental in Funchal Centrum.
Brutal Truth #6: Limited Property Management Options
You might think hiring a property management company would ease your burden. Instead, many turn out to be more trouble than they’re worth.
My friends, there’s no simple way to say it, and I know that you trust me not to sugarcoat anything, so let me say it as it is: Most Property Management companies in Madeira are scams. Simple as that.
Most property management companies in Madeira are out to scam you. I learned this the hard way. These so-called “services” often promise extensive maintenance, tenant sourcing and vetting, and reliable rent collection but rarely deliver on their promises.
Instead, they delay repairs, ignore tenants’ requests, avoid communications for weeks at a time, and sometimes even pocket rent payments.
Of course you can always go down the path of managing your own property. Since most Property Management companies in Madeira are scams, self-management could be a potentially good idea. You need to handle everything from finding tenants to handling maintenance and collecting rent. It’s essential to stay organized and keep track of all the financials. Having a system for managing expenses, repairs, and tenant communication can save you headaches down the road.
Though it might seem like extra work at first, managing your investment personally helps ensure that things run smoothly without relying on potentially dodgy services.
The other option you have, is the one I’m using myself, and most of my friends who invest in Madeira properties do, is to work with a non-Portuguese property management company, to make sure you’re dealing with reliable professionals who understand your needs better.
Companies and businesses on Madeira who are owner by foreigners who live on the island, are usually more transparent, more professional, and offer clear communication, which can prevent misunderstandings.
And of course that even in this case, it’s important to protect your investment by choosing a reputable company for all real estate endeavors. Having someone reliable means you won’t have to worry about hidden fees or poor service quality. If you’re looking for the best Airbnb and property management company in Madeira, I highly recommend you to work with Onpoint Estate – I’ve been working with them for many years now, and their team is nothing short of amazing. All my friends from the Madeira Real Estate community use them too, and they are very satisfied.
Brutal Truth #7: Limited Legal Protections For Foreign Buyers
You have to do your homework before buying a property in Madeira. No one will hold your hand through the process, and you can face unexpected legal issues without proper advice.
Thorough research can make or break your house-buying experience in Madeira. It’s crucial to understand all aspects like property valuation services and legal protections for foreign buyers.
Without proper knowledge, you might fall into the trap of scams by local real estate agents. In contrast, teaming up with reputable companies ensures a smoother process.
I found that while some regions like Funchal offer stunning views, they come with high property prices due to tourism demand. So, researching the cost of living and additional taxes is essential for budgeting effectively.
It also helps in identifying potential areas offering investment opportunities or those located in quieter neighborhoods perfect for comfortable living experiences.
Also, seeking legal advice is crucial before buying a house in Madeira. Limited legal protections for foreign buyers can lead to unexpected problems, and that’s the last thing anyone needs.
I always make sure to consult with a lawyer who specializes in real estate law (I highly recommend Fresh Portugal). They help me understand local regulations and guide me through any paperwork involved.
Legal experts can also ensure that all contracts are fair and transparent. This step protects my investment from hidden issues or potential frauds that might pop up later on. I can’t stress enough how important it is to get professional help when dealing with such significant purchases like land for sale or apartments for sale in Madeira.
What To Consider Before Buying A House In Madeira
Buying a house in Madeira isn’t just about finding a place with stunning views and two parking spaces. The island has unique challenges like climate issues and property valuation services you need to think through carefully.
Location And Regions In Madeira
Funchal, the capital city, tops the list for many buyers. Properties here range from €300,000 to €2,000,000. The vibrant lifestyle and direct access to Funchal’s amenities make it a hot spot.
Calheta and Câmara de Lobos offer stunning views and quieter environments. These areas of Madeira are perfect if you’re looking for comfort away from the bustling city. São Vicente and Santana provide picturesque landscapes that enchant anyone seeking tranquility.
Property Valuation Services
Getting a house valued can feel like trying to find the perfect seashell on a long beach. You need experts who understand Madeira’s unique property market. Many professionals offer robust valuation services, giving you clear insights into property values.
This helps avoid overpaying.
Local agents might lack skills, so work with experienced foreign professionals instead. A good valuation includes details about the property’s condition and market trends in regions like São Martinho or Câmara de Lobos.
Accurate valuations lead to sound investments and peace of mind while enjoying stunning views in your new home!
Types Of Properties Available
Madeira offers a variety of property types to suit different needs and tastes. You can find everything from apartments and penthouses to duplexes, houses, and luxurious villas. Some properties come packed with modern features like double glazing, electric shutters, sound systems, air conditioning, and solar panels.
Many people seek out homes offering stunning views or properties located in quiet areas for peace and tranquility. Whether you’re after a cozy two-bedroom apartment or a spacious five-bedroom house in São Vicente with ample storage room, Madeira has diverse real estate options.
Investors might also be interested in plots of land perfect for developing real estate projects that capitalize on the region’s growing popularity.
Cost Of Living
Prices can sneak up on you in Madeira. Groceries, for instance, don’t come cheap. A loaf of bread costs around €1.50 and a liter of milk is about €0.90. Even simple meals at local restaurants set you back roughly €15 per person.
Rent isn’t any kinder to your wallet. An apartment in Funchal may run between €1,200 and €3,000 monthly depending on its size and location. Utilities like electricity, heating, cooling, water, and garbage average around €100 a month for an 85-square-meter space, a bit high compared to mainland Portugal.
Climate And Natural Hazards
Madeira boasts a mild climate with temperatures rarely dipping below 10°C or rising above 26°C. This is probably one of the main reasons why the island is so popular for tourists and for foreign residents – the weather is pretty much perfect all year around.
Winter here is like summer in Warsaw – simply nice. And the summer is like spring. It’s never too hot and never too cold. Always perfect.
Accessibility And Transportation
Getting around Madeira can be a bit tricky. Public transport in Madeira exists, but it doesn’t cover all areas efficiently. I found myself waiting for buses that run infrequently, especially in the more remote regions like Camara de Lobos.
If you’re planning to buy there, having a car is almost essential.
Even though some amenities like health services and schools are reachable by public transport, it’s not as reliable as you might hope. The narrow roads and limited parking spaces add another layer of challenge if you drive yourself.
Budget And Financing Options
As a foreign buyer, you need squeaky-clean credit and a solid financial plan. Most local banks have strict requirements, so securing financing might be trickier than you’d expect.
The property prices here range drastically, from around €60,000 for smaller spaces to over €3,000,000 for luxury homes.
Budgeting is another beast altogether. Besides the high property prices in popular areas like Funchal (€300,000 – €2,000,000+), there are hefty taxes and fees to consider. Be prepared to shell out extra euros for stamp duties, notary fees, and registration costs.
It’s crucial to factor these additional expenses into your budget from the get-go because ignoring them could lead to unpleasant surprises later on.
Tips For Successfully Buying A House In Madeira
Don’t get swayed by charming photos online, and always inspect every house in person. Also, keep an eye on fluctuating market prices to snag the best deal.
Don’t Work With Local Real Estate Agents
As I said multiple times: Working with local Madeiran real estate agents can be a risky move. Many of them prey on foreigners who are not familiar with the market and language, leading to potential scams.
Instead, I always recommend seeking foreign experts who reside on Madeira and understand both the landscape and your needs.
Local agents might seem convenient, but they often provide misleading information or hide critical details about properties. Foreign agents display integrity and transparency in their dealings.
For example, while you might find a lovely 4 bedroom house located in a quiet neighborhood through an honest agent, you risk hidden pitfalls when going local (Like not telling you that it’s illegal to have running water in the property for the next 12 years – happened to a colleague of mine). Anyway, trusting someone from outside Portugal ensures you’re investing wisely without falling into traps that many newcomers face.
Negotiate Wisely
Negotiating the price of properties in Madeira can be a game-changer. I always start by researching recent listings and trends. This information helps me understand what a fair offer might look like.
Setting filters for my property search allows me to compare different options based on size, number of rooms, and other features.
It’s crucial to stay firm but flexible during negotiations. If I’m eyeing an investment opportunity with two bedrooms or considering a plot of land, I’ll highlight any needed repairs as leverage for lowering the price.
Engaging sellers about taxes and additional costs can also prompt them to make concessions or adjust their offers accordingly.
Stay Updated On Market Trends
Keeping up with market trends is crucial for making informed decisions about buying or selling. I often check websites like Idealista to see the number of properties listed and their prices. This helps me understand what’s available.
I also pay attention to recent listings and shifts in demand. For example, if there’s an increase in property offers in popular regions of Madeira, this could indicate growing interest and potentially higher prices soon.
Staying informed means I can act swiftly on opportunities that align with my budget and needs.
Be Prepared For A Long Process
Buying a house in Madeira can feel like running a marathon. The paperwork alone might make your head spin. There are multiple legal documents to finalize and countless visits to notaries to endure.
It feels like every step takes forever, from getting bank approvals for financing options to waiting for property valuations.
Don’t forget the language barrier that drags out conversations with local officials and real estate agents who often have limited English skills. It’s critical (and time-consuming) to double-check translations of contracts and agreements before signing anything, ensuring you understand all details clearly.
Frequently Asked Questions
What should I know about buying a house in Madeira?
Buying a house in Madeira means understanding the selection of houses available, from cozy 2 bedrooms to spacious three-bedroom properties located in picturesque areas.
Is it easy to find properties with good views?
Yes, many properties are located in the picturesque parts of Madeira, offering stunning views that can make you feel like you’re living in a postcard.
Are there many options for different family sizes?
Absolutely! Whether you need 2 bedrooms or a 3-bedroom home, there’s a variety of choices to fit your family’s needs and lifestyle.
How important is location when choosing property on this island?
Location is crucial because where the property is located can significantly impact your daily life and enjoyment of Madeira’s unique beauty and charm.
The Bottom Line
Buying a house in Madeira comes with its set of challenges. From limited housing options to higher property prices, one must be prepared for some tough truths:
- HUGE Demand & Low Supply: Finding a house in Madeira is tough due to high demand and few new listings. Properties get snapped up quickly, making the market very competitive.
- Raising Property Prices: Prices are steep, driven by constant tourist interest. For example, a 2-bedroom apartment in São Martinho can cost around €550,000, while in 2022 it would be €200,000.
- Cultural Barrier: Most locals despite being poor, have a very slow approach to business and service, complicating communication and legal transactions. Hiring bilingual foreign professionals for clear understanding and peace of mind becomes essential.
- Additional Costs: Beyond purchase price, buyers must budget for extra expenses like Property Transfer Tax (IMT), Stamp Duty (IS), notary fees, and maintenance costs that add up quickly.
- Limited Financing Options: Foreign buyers face strict financing rules with higher requirements such as good credit scores and larger down payments of at least 20%.
Again, the cultural barriers and additional costs are are something you shouldn’t take lightly. But hey – living in one of the most beautiful and prestigious places in the world doesn’t come without !
