For many northern Europeans looking for a home in the sun, the real choice is between two countries: Spain’s Costa del Sol or Portugal’s Algarve. Both offer coastal living, beaches and golf. The practical differences include local asking prices, purchase taxes and flight connections.
The price difference
| Area | Asking price per m² | €300,000 buys about |
|---|---|---|
| Lagoa, Algarve | €4,113 | 73 m² |
| Albufeira, Algarve | €4,168 | 72 m² |
| Algarve (Faro district) | €4,202 | 71 m² |
| Benamara - Atalaya, Estepona | €4,306 | 70 m² |
| Estepona Pueblo | €4,400 | 68 m² |
| Lagos, Algarve | €4,655 | 64 m² |
| Estepona, municipality | €4,961 | 60 m² |
| Loulé, Algarve | €5,159 | 58 m² |
In August 2026, Estepona’s asking-price index was €4,961 per m², compared with €5,159 in Loulé municipality and €4,202 across the Faro district. Loulé includes the resorts of Vilamoura and Quinta do Lago, although its municipality-wide index does not represent either resort individually. Estepona Pueblo and Benamara - Atalaya both asked less than Loulé and Lagos.
The tax difference for non-residents
Since May 2026, Portugal has charged a flat 7.5% IMT (property transfer tax) on residential property bought by people who are not Portuguese tax residents, plus 0.8% stamp duty (CIMT, article 17 (opens in a new tab); Decreto-Lei 97/2026 (opens in a new tab); stamp duty table (opens in a new tab)). It depends on tax residence, not nationality, and applies to new homes as well as resales. Spain has no additional transfer-tax rate solely for being non-resident.
| On a €400,000 home | Estepona | Algarve, non-resident buyer |
|---|---|---|
| Resale | 7% ITP = €28,000 | 7.5% IMT + 0.8% stamp duty = €33,200 |
| New home from a developer | 10% VAT + 1.2% AJD = €44,800 | 7.5% IMT + 0.8% stamp duty = €33,200 |
On a resale home, a non-resident buyer pays €5,200 less in purchase tax in Estepona. On an ordinary new home from a developer, the comparison reverses and the Algarve is €11,600 cheaper.
The Portuguese surcharge does not apply to buyers who have previously been Portuguese tax residents. Buyers who become Portuguese tax residents within two years of the purchase, or who let the home for housing at a moderate rent under the conditions of the law, can apply for the ordinary rate to be recalculated (Portuguese tax authority, September 2026 (opens in a new tab)).
Portuguese tax rules changed in 2026 and are still being interpreted. If you are comparing the two countries, take advice on both sides of the border before committing.
What Estepona offers
Lower tax on a resale home. No additional transfer-tax rate for non-residents: on a €400,000 resale, €28,000 in Estepona against €33,200 in the Algarve.
A much bigger airport. Málaga handled 26.76 million passengers in 2025, Spain’s fourth-busiest airport, against about 10.4 million at Faro (Aena (opens in a new tab); VINCI Airports (opens in a new tab)). See Getting there.
Direct flights to all three Baltic capitals. Málaga’s official destination directory, checked in October 2026, lists Riga, Tallinn and Vilnius, along with Copenhagen, Stockholm, Oslo and Helsinki; Faro’s lists Riga (Aena (opens in a new tab); Faro airport (opens in a new tab)). Check operating dates when comparing flights.
Cheaper than the Algarve’s top resort municipality. Estepona’s index was below Loulé’s in August 2026.
A Spanish town with new homes. A renovated old town with more than 70 murals, a working port, 23 km of coastline within the municipality, and new homes accounting for a quarter of home purchases in 2025 (IECA (opens in a new tab)).
Schools and healthcare across the municipality. A levels at Queens British Grammar School, the IB Diploma at Colegio Internacional Atalaya, a public hospital of its own and a private hospital with 24-hour emergencies. See Schools and family and Healthcare.
Marbella nearby. Marbella and Puerto Banús extend the choice of shopping, dining and leisure along the coast.
What the Algarve offers
Lower average asking prices. In August 2026, the Faro district’s index was 15.3% below Estepona’s: at those indices, €300,000 equated to about 71 m² against 60 m².
Lower tax on a new home. On an ordinary new-build purchase, a non-resident buyer pays 8.3% in Portugal against 11.2% in Estepona.
Faro airport close to the central Algarve. Road-distance estimates checked in October 2026 put Vilamoura about 25 km from Faro airport and Albufeira about 37 km; Lagos is farther west, at about 86 km.
Portugal. For buyers who prefer Portugal, its language, its food and its pace, the Algarve is the natural choice, with British-curriculum education such as A levels at Nobel Algarve Lagoa and private hospitals in Alvor and Faro.
Who each place suits
The Algarve suits buyers drawn to Portugal and its lower regional asking prices, those buying a new home from a developer, and those planning to become Portuguese tax residents.
Estepona suits buyers looking for a Spanish coastal town, a resale home without a non-resident tax surcharge, Málaga’s flight network, including all three Baltic capitals, and a broad choice of services across the municipality.
Asking-price figures: idealista, August 2026. Airport passengers: calendar year 2025. Tax rules, destination lists and distances: checked October 2026. Prices and tax rules change; confirm current figures before deciding.
