But it is the region’s world-class golf facilities that act as a major attraction for holiday homebuyers.

‘Although only around 40 per cent of homebuyers play golf, it’s still considered essential to be in an attractive, well-maintained golfing area, which will yield good rental prices,’ says Charles Weston Baker, of Savills International.

Enticing: Lagos, in largely unspoiled Western Algarve, is proving tempting to buyers

Inquiries for homes in the Algarve, which has more than six hours of sunshine a day in December and January, and temperatures often above 15c, are improving significantly.

Figures supplied by primelocation.com reveal a 55 per cent year-on-year increase in the volume of website searches for homes  in Portugal.

Santander Totta — which provides many mortgages to people buying properties in the country — has also seen increased activity, according to Simon Perks, the bank’s general manager. ‘In the past three to four months we have seen more interest from those looking to buy at the top end of the market.’

Central Algarve

The ‘Golden Triangle’ of central Algarve, encompassing Quinta do Lago, Vale do Lobo and  Vilamoura, is the most popular place to own a home. Property prices have held up well compared with other parts of the Algarve and Portugal.

Vale do Lobo  

This is high-end Portugal. The property, golf, spa and beach resort is three times the size of Monaco and one of the best-established resorts in Europe.

Judith Chalmers, the former presenter of TV show Wish You Were Here, owns a house in Vale do Lobo, which she describes as her ‘favourite place of all’.

Despite a fall in sales in the past two years, the owners of Vale do Lobo have been reluctant to reduce property prices, a gamble that appears to be paying off.

‘Vale do Lobo had a good year in 2010,’ says Diogo Gaspar Ferreira, chief executive officer of Vale do Lobo. ‘We haven’t been as affected by the slump as other Algarve-based developers, principally because we are a high-quality provider.’

There are 1,500 homes and several generations of homebuyers at the resort, which ensures a steady flow of resale villas and apartments. What’s more, Vale do Lobo launched a £425 million expansion, which will take place over the next ten years and include 500 new homes.

With 50 per cent of buyers coming from Britain, 150 plots for luxury villas at Vale do Lobo have been made available to Lansdowne RE.

The residences include beachfront and golf course homes, with prices ranging from £1 million to more than £10 million.

Top-end Portuguese property: Mulberry Manor in Almancil is on the marklet for £3.5 million (Savills)

Quinta do Lago

Another premier Algarve resort where the economic downturn has had minimal impact, according to Alison Buechner Hojbjerg, of Savills Quinta Properties.

The golf-led development has 800 acres of villas, townhouses and apartments, many with sea views, and prices from £400,000 to £10 million-plus. Rentals at Quinta do Lago in the August peak can reach more than £6,000 a week, according to Hojbjerg.

Western Algarve

The Western Algarve is rugged and includes places such as Lagos, Silves, Sagres and Cape St Vincent. This area was quick to react to the global economic crisis, and is enticing more buyers with good-value properties.

According to Knight Frank International, average prices in the region, within an hour of Faro International Airport, have fallen by around 30 per cent since the market’s peak in 2008. And there’s more room for price negotiations.

‘Vendors have been quick to grasp the need to reduce prices in order to sell,’ Georgina Richards, of Knight Frank International.

Modern villa: Herdade do Funchal in Lagos is for sale for £1.2 million (Knight FranK)

Knight Frank reveals that the greatest demand for homes in Western Algarve is from Britons with a budget under £850,000, compared with between £1.3 million and £3.5 million in Central Algarve.

Martinhal, in a prime position near the historic town of Sagres, overlooking the beach and five-star Martinhal Beach Resort & Hotel, has a range of villas and houses  for sale.

Prices start at £473,000, and the majority are with a leaseback scheme offering an annual gross rental return of 4 per cent on the purchase price for ten years, along with personal usage of up to eight weeks a year.

AlmaVerde, around 15 minutes from Lagos, is an eco-friendly, low-density development, of three and four-bedroom villas on a former farm. A three-bedroom villa, with a private swimming pool, starts at £362,000.

Eastern Algarve

Heading towards the Spanish border, homes in the less-developed Eastern Algarve, in towns such as Tavira and Monte Gordo, are considerably cheaper than the rest of the region, with prices starting from less than £100,000. But a short-lived surge in interest from buyers has cooled since the global economic crisis.

One of the few exceptions is the Monte Rei Golf & Country Club, which has a championship Jack Nicklaus Signature golf course. The entry price on a three-bedroom villa is £999,000.

Some people understandably remain cautious about the future direction of the Algarve property market, amid fears of a potential Spain-style property crash.

But despite a building boom in the past ten years, stringent building restrictions imposed by the Portuguese government have ensured that any oversupply in housing is limited, unlike the flood of unsold homes in Spain.

‘Portugal has been much more conservative in its approach to development, and its economy is not so reliant on the house-building sector,’ says Andrew Hawkins, head of international at Chesterton Humberts.

Savills International, 020 7016 3740; Santander Totta, 020 7621 2660, santandertotta.co.uk; Vale do Lobo, 00 351 289 353 000, valedolobo.com;

Quinta Properties, 00 351 289 396 073, quintaproperty.com;

Infinito Real, portugalvillas andapartments.net; Knight Frank International, 020 7629 8171, knightfrank.co.uk;

Martinhal, 00 351 282 240 200, martinhal.com; Monte Rei, 00351 281 950 950, monte-rei.com

Chesterton Humberts, 0203 040 8210, chestertonhumberts.com;