Every year this hilltop community becomes Christmas Village, a rustic, artisanal festive wonderland attracting visitors from far and wide

José Galvão does not look much like an elf. At 79, he has the weather-burned face and strong labourer’s hands of a man born in the mountains of central Portugal. Yet, for months he’s been beavering away behind the scenes to bring to life what must be one of the world’s friendliest and least showy Christmas celebrations.

Every Christmas for the past eight years, the 170 or so residents of Cabeça in the Serra de Estrela mountain range transform their remote village into a rustic winter wonderland. The idea sprang from a competition run in 2013 by the local council, but has since taken on a life of its own, attracting a growing flow of visitors from across Portugal every year.

Sitting just off the central plaza with some of his old-boy friends, José breaks off his chinwag to show me the three-inch folding knife in his pocket. “I’m no expert, but I do a bit of carving,” he chortles through a gap-toothed smile. “We’ve all got to muck in, certo? Cabeça is the Christmas Village after all.”

He is right on every count. Following his directions, I walk 100 metres or so down one of Cabeça’s narrow streets. Pop-up stores and market stalls line the route, which is busy with Portuguese day-trippers on the hunt for festive fun.

I briefly stop at Loripão, a bakery from the next-door village, which has rented a villager’s front room for the fortnight’s celebrations. It’s a paradise of all things sweet and sugary, and its biggest seller by far is the bolo rei (king cake) – the rounded sugary bread topped with crystalised fruits that adorns every Portuguese sideboard at Christmas.

Outside, decoration are strung between the square granite houses that characterise the local architecture. Everything is homemade, from the heart-shaped frames swaddled in ferns to the moss-covered stars studded with red berries.