The Price of a T2 in the Pocket of National Families

Buying a home is always a very important decision in anyone's life. It is a responsibility that we have for most of our lives, but the demands to achieve what for many, unfortunately, is a “dream”, are not few.

In view of the scenario of rising Euribor rates, to which inflation is added and the fact that most wages do not keep up with these rises, it becomes even more important to do some calculations before proceeding with the purchase of a house.

But, after all, how much does a couple need to earn to be able to buy a house? And what is the initial amount that is necessary to have?

Average Value of Apartments by District Capital

According to the data available on the Brainsre platform, the average value of a T2 apartment in the municipalities corresponding to the different district capitals, in the 3rd quarter of 2022, was:


* the data on the values of the apartments are relative to the average of the total number of properties transacted: new and used. Amounts are rounded to the hundreds.

We will use these values as a basis for calculating both the net monthly income required of a couple wishing to purchase a T2 apartment similar to those shown. But what do we need to take into account?

Financing Conditions

Financing conditions are an extremely relevant factor when making the decision to buy a home, as they are the ones that will define the monthly payment that we will pay during the contract. Therefore, there are some assumptions that we have to clarify, such as:

Amount to be financed
Rate Type: Fixed or Variable?
Spread and Euribor
Loan Duration
Effort Rate
Amount to be financed

So let's start at the beginning! Taking into account the table of average values for a T2 apartment in the different district capitals of Portugal, what will be the amount of financing necessary for a couple to be able to acquire each of these properties?

Normally, credit institutions finance between 80% and 90% of the lower value between the property's appraisal and the book value. We will then consider a financing percentage of 85% and that the average value taken as a reference serves as the basis for calculating the financed amount.

Rate Type: Fixed or Variable?

This is a hotly debated topic. If, on the one hand, a fixed-rate loan provides a certain amount of security, as we know what monthly payment to expect until the end of the loan (or, in the case of a mixed rate, for a few years), on the other hand, according to historical data, in no period it was rewarding to have a credit with this type of rate. The variable rate, despite the uncertainty, is more beneficial at times when there are drops in Euribor rates, but there are also periods when the exact opposite happens (just as we are seeing now). In any case, we chose to carry out the simulation with a variable interest rate (only taking into account the Euribor and the Spread), because a rate is always set at a higher percentage than that practiced in the variable rate, resulting from the “buying of security” by part of those who contract the credit. In addition, a variable rate loan can be transferred to a fixed rate at any time, but the opposite, within the same credit institution, is no longer allowed.

Spread and Euribor

The last half of 2022 was marked by the increasing increase in Euribor rates that serve as a reference for bank credit. After six years and seven months (between November 2015 and June 2022) in negative territory, the 6-month Euribor rate, which is the most used in Portugal for mortgage loans, entered positive territory on 6 June 2022 .

Taking into account the 6-month Euribor rates between the 29th of November and the 28th of December, the average is fixed at 2.534%, this being the percentage that we will take as a reference.

With regard to the Spread which, according to the Bank of Portugal, is defined as “an interest rate component, defined by the bank, contract by contract, when granting a loan”, it was estimated at 1.1%. The aforementioned spread is based on a market survey of several banking institutions, with values associated with the spread ranging between 0.95% and 1.25% having been detected.

Loan Duration

In addition to the data already presented, it is necessary to take into account the term of the loan. On April 1, 2022, the new rules that define the maximum age for mortgage loans came into force, which are tighter and affect, above all, those who are over 30 years old.

Thus, the following was defined:

Age equal to or less than 30 years: you can still pay mortgage loans with a maturity of up to 40 years, with no changes being made here;
Age greater than 30 years old and equal to or less than 35 years old: the maximum period to pay the credit is reduced by 3 years, changing the maximum limit from 40 to 37 years;
Age over 35: this is where the difference is most felt. The consumer now has 5 less years to pay the credit, increasing the maximum limit from 40 to 35 years.
Since, for credits that have more than one holder, the age of the oldest member counts.

Effort Rate

Sometimes there are questions about “What is the effort rate?”. In a very simple way, the effort rate is nothing more than the percentage of a household's income that is allocated to the payment of credit installments, which includes not only home loans but all others such as car or consumption.

This means that, if a couple has other loans in addition to the mortgage loan they intend to take out, all the installments of these loans are added together to estimate the maximum amount that the couple can request from the bank, for the mortgage loan, taking into account the rate of effort set by the institution.

Indications from the Bank of Portugal refer to a maximum effort rate limit of 35% of the net family income.

Value Result - Required Maturity

Taking into account all the data presented and based on the average values of T2 apartments in the municipalities that are district capitals, the minimum monthly net income required of the couple is presented, taking into account an effort rate of 35%:


But, in addition to the monthly income, what initial amount is needed for each case?

In addition to a net income that can cover the payment of the installment, taking into account the effort rate, it is also necessary to have an initial amount available to buy a property. On the one hand, properties are not 100% financed (with the exception of very specific situations and conditions, as can happen with bank properties) so it is necessary to have the down payment available to cover the difference between the price of purchase and the amount financed by the bank. On the other hand, there are other associated expenses such as: Municipal Tax on Real Estate Transfers (IMT), Stamp Duty (IS) and other charges such as the deed or the process at the credit institution.

In the following table we present the amount of capital that each couple needs to be able to acquire each of the T2 apartments, taking into account only the 15% down payment on the acquisition value of the property and the associated taxes (IMT and IS):


In view of the data collected, Lisbon appears, unsurprisingly, in the first place as the city where a higher initial amount is needed to purchase a T2 apartment, but also a higher monthly net income to support the costs associated with the provision of credit housing. In second place is the municipality of Porto and in third, Faro. In the opposite direction, as the municipality where it is more accessible to buy a T2 apartment, Guarda appears, followed by Portalegre and Castelo Branco. It should be noted that the most accessible areas are located inland, as opposed to the centers of the country's main coastal cities.

Brainsre is a proptech that allows not only the upload and analysis of portfolios, but also the consultation of statistics and requested prices, allowing clients to manage and contrast them with market data. It is an indispensable platform for investors, real estate agents, servicers, banks, real estate consultants and anyone operating in the real estate market.