The Algarve continues to be one of the most sought-after regions to live in Portugal, not only for local residents but also for foreigners seeking sun, sea, and quality of life year-round. However, the region's popularity has driven up house prices—especially in areas with strong tourist demand, such as Loulé, Albufeira, and Lagos.

To understand where it's still possible to live at more affordable prices, Imovirtual, a leading real estate portal in Portugal, analysed data from the second quarter of 2025 and identified the five cheapest cities in the Algarve to rent or buy a house. The results show that the difference between the most expensive and cheapest municipalities in the region can reach 81%, representing significant savings for those looking to live in the south of the country.

According to Imovirtual's quarterly study, the average sales price in the Algarve region was €538,333, while the average rental price was €1,333/month. These values reflect the influence of tourism and international demand on the local market, putting pressure on prices in the most upscale areas.

But the good news is that there are still municipalities where it's possible to live at costs much lower than the regional average, without sacrificing the prime location.

Rental prices

1. Castro Marim: €850/month – 36% cheaper than average

2. Tavira: €1,000/month – 25% cheaper

3. Lagoa: €1,233/month – 8% cheaper

4. Olhão: €1,308/month – 2% cheaper

5. Portimão: €1,383/month – slightly above average, but among the most affordable

Sale prices

1. Alcoutim: €101,333 – 81% cheaper than the regional average

2. Monchique: €260,000 – 52% cheaper

3. Vila Real de Santo António: €366,333 – 32% cheaper

4. Portimão: €395,833 – 26% cheaper

5. Olhão: €398,199 – 26% cheaper

At the other end of the scale, Loulé is the Algarve's most expensive municipality to live in, with an average sale price of €705,000 and rents reaching €1,800/month. Castro Marim also boasts high purchase prices (€670,000), while Albufeira leads the way in rental prices (€1,566/month).

In contrast, municipalities like Tavira and Olhão continue to offer significantly more affordable prices.