According to the National Institute of Statistics and the European Central Bank, in the 4th quarter of 2025, housing prices in Portugal increased by 23.25% in annual terms, which is the fastest pace in the entire history of observations. In April 2026, the median value of real estate reached 2,174 euros per square meter (+16.5% year-on-year), while apartments in Greater Lisbon are valued at an average of 3,352 euros per square meter. The main drivers are the continuing structural shortage of supply, stable domestic demand and rising construction costs. Experts predict a slowdown in growth to 11.7% this year due to deteriorating housing affordability.
In 2025, home sales set a record - 169,812 units (+8.6% YoY) for a total amount of 41.2 billion euros. The key factor was domestic demand: the share of resident buyers reached 95%, the highest since 2019. Government programs of tax benefits and state guarantees for young people have helped more than 93 thousand people to purchase housing. Against this background, purchases by non-residents have been declining for the third year in a row "Demand from citizens of non-EU countries fell especially sharply (-17.1%), which is attributed to the abolition of the Golden Visa for real estate buyers and the tightening of the tax regime.
Despite an increase in the number of building permits issued (+21.4% in 2025), the commissioning of new housing remains insufficient - 26,714 houses in a year. The OECD and the Bank of Portugal warn that administrative barriers, labor shortages and high costs are hindering a rapid increase in supply. In March 2026, the authorities adopted a package of reforms, including reducing VAT to 6% on construction work and simplifying urban planning procedures, but developers doubt that this is enough for a new construction boom.
The rental market is showing multidirectional dynamics: after double-digit growth in 2023-2024, in May 2026, asking rates nationwide decreased by 2.9% year-on-year. In Lisbon and Porto, rent fell by 2.7% and 7.7%, respectively, but rates continue to rise in 11 of the 15 regional capitals (the leaders are Viana do Castelo and Castelo Branco). The national average rental yield was 4.29%, with the highest in Setubal (4.89%) and the lowest in Lisbon (3.76%).
In June 2026, the European Central Bank raised key interest rates by 25 basis points due to inflationary risks related to the Middle East conflict. This is already reflected in Portuguese mortgage rates: the average rate on new loans in April was 2.85%, compared to 3.09% in current ones. In the first quarter of 2026, mortgage loans were issued for 10.3 billion euros (+18.5% YoY), but banks expect a decrease in demand for loans in the second half of the year due to higher financing costs.
Source: Global Property Guide
