Portugal’s housing market has surged to one of the fastest-growing in the European Union, with fresh Eurostat data showing that the country recorded the second-highest annual rise in property prices in the third quarter of 2025
New figures released on 9 January 2026 confirm the trend reported by The Portugal News, highlighting a real estate sector that has now expanded for six consecutive quarters, defying broader European cooling.
Portugal Far Outpacing EU and Eurozone Averages
According to Eurostat, Portuguese house prices climbed 17.7% year-on-year, far exceeding the 5.1% rise in the eurozone and the 5.5% EU average.
On a quarterly basis, prices increased 4.1%, reflecting continued momentum across both major cities and regional districts.
Key national metrics show:
- Annual price growth: +17.7%
- Quarterly price growth: +4.1%
- National median price: €3,019 per m²
- Transactions: Over 42,000 homes sold in Q3, totalling €10.5 billion
Economists say the figures underscore how sustained demand—driven by domestic buyers, returning emigrants and international investors—continues to stretch an already tight supply.
Regional Picture: “Explosive” Growth in Multiple Districts
Despite overall growth, Eurostat’s breakdown reveals significant regional disparities.
Highest Annual Increases (District Capitals)
- Santarém: +27.1%
- Beja: +20%
- Setúbal: +17.2%
- Castelo Branco: +16.7%
- Guarda: +15.5%
Most Expensive Cities
- Lisbon: €5,995/m² (highest nationally)
- Porto: Remains the second most expensive
- Funchal (Madeira): Third
- Faro (Algarve): €3,435/m²
Meanwhile, Vila Real was the only district to record an annual decline, slipping 6.1%, signalling early signs of market correction in isolated regions.
Existing Homes Fuel Growth as New Builds Lag Behind
Eurostat’s data shows a widening gap between older and newly built properties:
- Existing homes: +19.1% year-on-year
- New constructions: +14.1%
Analysts say the premium on established homes reflects acute supply shortages in central locations, where new building remains constrained by regulation, land availability and rising construction costs.
Government Announces €6.9bn Housing and Infrastructure Package
The figures land as Portugal’s Parliament debates a new 2026 housing package aimed at tackling affordability and boosting supply.
The government’s proposed measures include:
- Tax cuts for landlords:
Rental income tax reduced from 25% to 10% for leases up to €2,300/month. - VAT reduction:
Construction VAT cut from 23% to 6% for companies delivering affordable housing. - Public housing investment:
€900 million earmarked for renovating and expanding state-owned housing.
Officials say the €6.9bn allocation is intended to stabilise the market and address chronic shortages, but housing groups warn the measures may take years to filter through.
Outlook: Growth Expected to Continue Into 2026
Despite a shift toward what analysts describe as a “more mature phase,” there is no clear evidence of an imminent slowdown.
Strong employment, limited housing stock and ongoing international demand are expected to keep prices rising throughout 2026—though potentially at a more moderate single-digit rate as inflation cools and supply gradually increases
© 2026 M10News.
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