Portugal’s Housing Market: Price Increases and Global Trends

Introduction

The Portuguese property market has continued to show resilience and growth, with house prices rising above global averages. In 2024, house prices in Portugal increased by an average of 8.6%, reaching an average of €1,611 per square metre (m²), according to Statistics Portugal (INE). Meanwhile, globally, housing prices grew by 3.6% between Q1 2023 and Q1 2024, as reported by Knight Frank.

Regional Highlights: Algarve and Lisbon Lead the Way

In Portugal, the most expensive areas for property remain the Algarve, Lisbon, Setúbal Peninsula, Madeira, and Porto. The Algarve recorded an average price of €2,613/m², while Greater Lisbon topped the charts with an average of €2,740/m². Specific municipalities, such as Lisbon (€4,167/m²), Cascais (€3,976/m²), and Loulé (€3,269/m²), also stood out for their exceptionally high property values.

Across Portugal, 50 municipalities had average prices exceeding the national figure, with nearly all municipalities in the Algarve and Greater Lisbon included in this list. The Algarve showcased some of the highest prices outside Lisbon, with Lagos (€3,182/m²) and Vila do Bispo (€3,162/m²) following closely.

Limited Supply Drives Prices Up

Despite a decline in house sales across Europe in 2024, Portugal’s property prices were buoyed by several key factors:

• Limited Housing Supply: A shortage of homes for sale, coupled with slower delivery of new builds, has kept demand high.
• Lower Debt Costs: Slight reductions in mortgage interest rates have made property purchases more accessible.
• Strong Housing Demand: Healthy buyer interest continues to push prices higher, particularly in desirable regions like the Algarve and Lisbon.

These conditions align with global trends. Knight Frank’s Global House Price Index reveals that rising prices are being driven by low supply and improving economic conditions. However, the long-term sustainability of this growth depends on further reductions in housing credit costs.

Inflation and Real Price Growth

While nominal prices have risen, inflation in global markets has dampened real price growth. Adjusted for inflation, real house prices globally fell by 0.4% over the last year. For Portugal, where inflation slowed in 2023, the housing market benefited from a boost in purchasing power.

What’s Next for Portugal’s Property Market?

The combination of limited supply, continued demand, and improving credit conditions suggests that property prices in Portugal will remain robust. However, as global markets adapt to fluctuating inflation and economic changes, the pace of growth may vary.

Whether you’re eyeing the premium coastal properties of the Algarve or the cosmopolitan charm of Lisbon, Portugal’s housing market remains one of Europe’s most dynamic and resilient. As new homes slowly enter the market, potential buyers can expect a competitive but rewarding landscape.