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For years, Spain has topped the list of dream destinations for Brits looking to escape the UK. With its warm weather, great food and laid-back lifestyle, it seemed to tick every box.

But while Spain's expat population has levelled off, its neighbour Portugal is seeing a huge surge in newcomers - and for good reason. Since 2018, the number of expats in Portugal has increased by 150%, despite challenges such as Brexit and the COVID-19 pandemic. There are now nearly 50,000 British residents in Portugal, making them the second-largest foreign community in Portugal, surpassed only by Brazilians. The most popular regions for Britons include the Algarve, Lisbon, Setúbal and Porto. So what's driving the boom, and why are so many Brits staying for good?

Money talks, and for many expats, Portugal simply makes more financial sense. A recent TikTok video from a woman living in Spain summed up the struggle, saying: "Basically, you're working to survive."

The average rent for a one-bedroom apartment in Spain now sits at around €972, but popular expat hotspots can be far higher. Spain is also considering a controversial 100% property tax for non-EU residents, which could double the cost of buying a home before obtaining residency.

Furthermore, inflation has hit Spanish households hard - grocery prices have increased by nearly 40% since 2019, while wages have failed to keep pace.

In contrast, Portugal has earned a reputation as one of Western Europe's most affordable countries. Housing Anywhere reports that a single person can live comfortably for around €1,285 a month. Numbeo data shows Portugal's cost of living is nearly 38% lower than the UK, making it especially appealing for retirees on fixed incomes.

Portugal has also made it easier for foreigners to settle in. Its Digital Nomad Visa, launched in 2022, is designed for remote workers earning from abroad. The visa can last for a year or lead to permanent residency, with applicants needing to show an income of €3,480 (£3,060) per month.

For retirees or those living off passive income, the bar is even lower - around €870 (£765) per month, equal to Portugal's minimum wage.

Spain, meanwhile, offers a non-working visa that requires retirees to prove an annual income of roughly €30,240 (26,600), plus an additional amount for dependents - a significantly higher threshold.

Spain is also suffering from the fallout of the scrapping of its Golden Visa earlier this year. The Portuguese equivalent, however, is proving exceptionally popular, particularly with the British, as it is designed for non-EU citizens. The Portuguese Golden Visa is available to Brits for a €500,000 (£439,200) investment. It grants visa-free travel within the Schengen Area and requires a minimal physical stay in Portugal of seven days in the first year and then 14 days in each subsequent two-year period. After five years of holding the residency, you can then apply for permanent residency or citizenship.

Spain is famous for its sunshine, and while Portugal can't quite match the Costa del Sol for year-round heat, most of the country enjoys hot summers and mild winters. The north receives more rain, but the climate overall remains a significant draw for those seeking a slower, outdoor lifestyle.

Spain may still hold the classic appeal, but for many Brits, Portugal offers a better balance - a lower cost of living, friendly visa options and plenty of sunshine to go around. For expats watching their budget, it's not hard to see why Portugal is fast becoming the new Iberian dream.

Over 47,409 British citizens currently reside in Portugal, according to the country's Agency for Integration, Migration and Asylum (AIMA). This represents a significant increase from the 21,300 British nationals living in the country in 2000, based on data from Portugal's Observatório da Emigração.