Soaring Real Estate Values Reach Historic Levels
The Portuguese housing market experienced a significant surge in 2024, as reported by the National Statistics Institute (INE), with home sales skyrocketing by 24.9% from January to March compared to the same period in 2023. This boom, however, is not accompanied by a similar increase in residential supply, creating an imbalance that drives up housing prices.
According to the INE data, a total of 40,162 homes were sold during the first quarter of 2024, setting a new record. The average price of homes sold reached €1,951 per square metre (€/m2), marking a new high. The increase in home prices, not limited to a specific building method, reached 18.7% last year, the highest variation since the beginning of the series in 2019.
The discrepancy between rising house sales and limited residential supply is primarily due to a significant imbalance between strong buyer demand—both domestic and international—and insufficient new housing stock. This supply-demand gap means that new homes come onto the market and are quickly purchased, pushing prices higher despite ongoing efforts to increase supply.
Sustained strong buyer demand is a key contributing factor. Portugal has been experiencing steady buyer interest for at least six consecutive months in 2025, driven by economic growth, attractive financing, and international investment appetite, particularly in luxury and prime locations like the Algarve. The supply of new residential properties is not keeping pace with demand in many regions, especially in high-demand coastal and metropolitan areas.
The high demand for premium and holiday homes also exacerbates pressure on prices. There is a distinct unmet need in luxury and lifestyle-oriented markets, attracting both primary buyers and investors. Regional variation in supply-demand dynamics also plays a role, with some areas experiencing tighter supply, while others might have relatively more availability, resulting in localized price pressures.
The high cost of renting is another factor fueling the high dynamism in home sales. Although rental demand shows some recent moderation due to increased rental listings, rents remain high and unaffordable for many, encouraging some households to shift toward buying—which adds further demand pressure on for-sale housing.
New support for young people to buy homes, including exemption from IMT and public guarantees, is helping drive home sales in Portugal. However, the pace of home purchases is faster than the increase in residential supply, suggesting that the Portuguese housing market will continue to experience high dynamism in the coming months.
In conclusion, Portugal's housing market in 2025 is characterized by strong, persistent demand outstripping limited housing supply, leading to rapid sales of new properties and a continued upward trajectory in housing prices across much of the country.
In 2025, Portugal's housing market continues to thrive with sustained strong buyer demand, driven by factors such as economic growth, attractive financing, and international investment, particularly in luxury and prime locations like the Algarve. This high demand, however, significantly outpaces the increase in residential supply, resulting in a persistent supply-demand imbalance that drives up housing prices in many regions, especially in high-demand coastal and metropolitan areas (finance, investing, housing-market, portugal).
Despite efforts to increase supply, the fast pace of home purchases, such as those supported by new policies for young buyers, has not been able to keep up with this strong demand, indicating that the Portuguese housing market will likely maintain its high dynamism in the coming months (housing-market, portugal, real-estate).
