The affordable cost of living makes the Algarve one of the most popular places for ex-pats

Living in Portugal, and the Algarve in particular is fantastic. We can enjoy 300+ days of sunshine every year, we can walk along beautiful beaches, dine on fresh fish every evening and thanks to the laid-back culture, stress is a thing of the past. We love it, and the affordable cost of living is making the Algarve one of the most popular places for ex-pats to move to, especially now that costs worldwide are starting to soar.

It all sounds amazing, but we know you are after the cold hard facts to back up what we are saying. Obviously, everyone’s outgoings will be different, with some living on less and others spending more, but having done the calculations, it is possible for a couple to live in the Algarve for around €800 – €1,200 per month.

Eat me

Eating out in the Algarve is very affordable, especially when compared to many other European countries. If you go to a traditional Portuguese restaurant in the Algarve, a main meal usually costs between €8 - €13. If you head off the beaten track away from the tourists then you can find smaller restaurants offering a starter, main course, dessert and drink for as little as €10 all in.

Most cafes serve food too, as you walk in you will be greeted with an array of tempting pastries, cakes and Portuguese snacks ranging from €1.50 - €5. For a small beer (imperial) or a glass of wine, expect to pay around €1.50 - €2.50. An espresso (bica) usually costs between €0.50 - €0.80 and a gorgeous pastel de nata will be about €0.80 - €1.20.

On the other end of the scale Portugal has some amazing fine dining restaurants with 40 Michelin stars awarded in 2022 to 33 restaurants across the country – 8 of those in the Algarve:

• Vistas Restaurant at Monte Rei Country Club

• Vista at Bela Vista Hotel & Spa

• Vila Joya at Hotel Vila Joya – Galé

• Ocean Restaurant at Vila Vita Parc – Porches

• Gusto by Heinz Beck at Conrad Algarve

• Bon Bon – Carvoeiro A Ver Tavira

• Al Sud at Palmares Clubhouse

In terms of supermarket shopping, the Algarve has a plethora of supermarkets – Lidl, Aldi, Pingo Doce, Intermarché, Continente, SPAR, Jumbo, Auchan, Modelo, Apolónia, as well as a number of ex-pat focused ones – Iceland and The Food co being the largest. Expect to pay around €80 - €100 for a couple’s weekly shop. Every now and again we go to the local farmers' markets - not only does this help with our Portuguese - the food you can buy there is organic but don’t expect it to be cheaper than in the supermarkets. For those who have food allergies, intolerances, or are vegan, the good news is Portugal now stocks quite a variety of products without gluten, lactose etc – these do come with a heavier price tag, but the choice is there.

Drink me

Booze is also pretty cheap! It is possible to find a good everyday bottle of wine in the supermarket for just €2 - €3, although the average is probably closer to €4 - €5. Branded spirits tend to be on a par with prices back home, but a bottle of fizz – especially during Carnival and bank holidays is well priced.

Coffee is a staple here in Portugal, you can find instant coffee here, but be prepared to spend a good few minutes marvelling at the range of ground coffee available in the supermarket aisles! For tea drinkers, the ex-pat supermarkets are the places to find a good tea bag for a builder's cuppa, most supermarkets stock a huge range of herbal and fruit teas.

One thing that you will need to get used to – especially if you own a villa with a borehole and no mains water – is buying bottled water to drink. Unless you have mains water or a filter system in your home, you will have to spend cash every week on bottled water. There is a big selection of water to choose from, 1.5 litre bottles all the way up to 7 litres and different brands and levels of ph! Expect to pay around €0.60 - €1.80 for a 5 litre bottle.

Pedal to the metal

Unlike Lisbon and Porto, having a car in the Algarve is pretty important. You can get around by train, there is a bus network, and of course Uber is here, but not having a car will definitely limit your ability to easily see a lot of places. What options do you have car wise?

You can rent a car, around €10 per day in the winter but be prepared to pay substantially more in the summer. You can bring your car with you - if you choose to bring your car from home then you have around 6 months to use it before it needs to be matriculated into Portuguese plates, or you can buy one. Buying a car, even a second-hand one in Portugal is one of the areas which really goes against the country’s affordability score. The new and second-hand car market is expensive, do not expect to pay UK prices for a car here, you can be shocked when looking around. From experience, buying cars in the north of the country - as far up as Porto - can knock thousands off the price, however if this seems a bit of a trek then there are a multitude of second-hand car dealerships across the Algarve as well as dealerships in the main cities selling new cars to choose from. Yearly road tax and insurance are cheaper, so it’s not all bad news.

Rail travel is extremely affordable, especially long-distance and the trains are quite reliable and clean. You can get to Lisbon from the Algarve for around €25. Buses are another option, with a ticket up to Lisbon starting at just €5!

Utility costs

Utilities hit the headlines recently thanks to soaring costs in some countries, here in the Algarve prices have increased, but as they were quite low to start with, they are still affordable and for many will not break the bank. The utilities are electricity, water (if no borehole,) gas and internet. Looking at these costs for an apartment these come to around €100-150 per month. Of course, this varies depending on your usage. 

Other costs to consider

Health insurance - Portugal has a public health service, which you can sign up for as a resident. Some people prefer to sign up for a health insurance plan, which will obviously increase your monthly costs.

Language classes - Group language classes usually cost around €60-70 per month while one-to-one classes cost around €15 per hour on average.

Other costs that come into play each year are those associated with your property. As well as annual property tax, IMI, you will also need to pay condominium charges if you live in a development with common areas that need to be maintained - such as gardens, pool, elevators, security etc. As a rule of thumb in these condominiums, the more facilities there are, the higher the charges. 

If you look after your own private swimming pool this will incur extra costs, but the cost of household help (gardeners and cleaners) tends to be relatively low. Buildings insurance and contents insurance tend to be similar to those in other European countries.