Rising Construction Costs in Portugal (2025): What Homebuyers and Investors Need to Know
š Table of Contents
š§± Overview: Why Are Construction Costs Rising?
According to Portugalās National Statistics Institute (INE), the cost of building new homes rose 3.8% year-on-year in March 2025, compared to 3.2% in February. This jump reflects rising wages in the construction sector and moderate increases in material costs.
Labour costs surged 7.1%, contributing 3.2 percentage points.
Materials like glass, insulation, and waterproofing systems rose by ~10%.
Meanwhile, wood products and some steels decreased by ~10%.
šØ What Materials Are Getting More Expensive?
Materials that contributed to the price increase:
Thermal & acoustic insulation
Glass and mirrors
Sealing & waterproofing systems
Materials that decreased:
Wood & wood-based panels
Mild and galvanised steel sheets
PVC and steel pipes
šļø How Does This Affect Homebuyers in Portugal?
Whether youāre buying land to build or looking at off-plan developments:
Expect higher upfront costs or revised construction estimates
New homes may experience delays as developers adjust budgets
Investment projections must be recalculated with updated materials and labour pricing
š¼ Economic Impact on the Housing Market
With the housing shortage in the Algarve and other popular areas, these increases will:
Place pressure on affordability
Slow down the new supply
Benefit sellers of existing homes as new build prices rise
If you are an existing owner of a property and are looking to find out the current House prices in the Algarve Portugal in 2025
Portuguese Construction Cost Changes 2025
Ā
Category | Year-on-Year Change (%) | Contribution to Total (%) |
Labour Costs | 7.1 | 3.2 |
Material Costs | 1.1 | 0.6 |
Glass & Mirrors | 10.0 | Ā |
Insulation Materials | 10.0 | Ā |
Waterproofing Materials | 10.0 | Ā |
Wood & Wood Derivatives | -10.0 | Ā |
Steel Sheets | -10.0 | Ā |
PVC & Cast Iron Pipes | -5.0 | Ā |
š Helpful Resources & Where to Learn More
ā FAQs
What is the current rate of construction cost increase in Portugal?
As of March 2025, the year-on-year increase is 3.8%, with most of the rise driven by labour costs.
Why are labour costs increasing in Portugal?
Labour costs rose 7.1%, likely due to skilled labour shortages and higher wage demands within the construction industry.
Are all building materials more expensive?
No. While insulation and glass products rose ~10%, wood and some metals fell by a similar margin.
Will this affect the price of homes for sale?
Yes. Builders may pass higher construction costs onto buyers, especially for new builds and off-plan properties.
Should I delay my construction project in Portugal?
Not necessarily. If youāre already locked in or working with a reliable builder, now may still be a good time ā just factor in possible cost variations and plan contingencies.
Thinking of Constructing - Check out Land, Plots & Ruins for sale in The Algarve
1-hectare building plot with a project approved in Lagos, Algarve
Land & plotsAdded: October 14, 2025
Mark McLoughlin: A Passionate Explorer of Algarveās Rich Heritage
For over 20 years, Mark has called the Algarve home, immersing himself in its landscapes, culture, and history. His passion lies in sharing the regionās stories through writing, photography, and guides for those who live here or dream of making the Algarve their home.
As a Level 10 Google Local Guide, Mark has contributed extensively to showcasing the Algarveās hidden beaches, historic towns, and local gems, helping both residents and visitors discover the best of this southern paradise.
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