The purchase of homes in Portugal has been cooling in the face of high housing costs, high interest rates on loans and low purchasing power. And this cooling of demand for homes in the country has been reflected in prices. The National Statistics Institute (INE) revealed at the end of April that the average cost of all homes sold in the final quarter of 2023 was 1,619 euros per square metre (euros/m2), 7.9% more than in the same period last year. But compared to the previous quarter, house prices in Portugal fell by 1.3%, a trend felt in 14 of the 24 most populous municipalities, including Lisbon and Porto.
"In the fourth quarter of 2023, the average price of family dwellings in Portugal was 1,619 euros/m2, corresponding to a year-on-year rate of change of 7.9%," INE said in the bulletin published on Tuesday 23rd April. From the outset, it's clear that house prices have slowed down, as the year-on-year change is lower than that recorded in the previous quarter (10.0 per cent).
But compared to the previous quarter, there was actually a correction in the prices of houses sold in Portugal. The average price of 1,610 euros/m2 recorded in the last quarter of 2024 represented "a decrease of 1.3% compared to the third quarter of 2023, reversing the upward trend that had been in place since the fourth quarter of 2022", the Portuguese statistics office reveals.
- Foreign buyers in Portugal
- 14 municipalities see house prices falling at the end of 2023
- House prices fall in 13 sub-regions of the country
Foreign buyers in Portugal
Families living in Portugal also bought cheaper houses between October and December 2023 than in the previous quarter: the average price of 1,584 euros/m2 was 1.1% lower. The same is true for foreigners, as the average cost of homes sold to these buyers was 2,241 euros/m2, 2.4% less than three months earlier. This fall in the price of houses bought by foreigners was felt in transactions carried out by those living outside the European Union (-9.7%), as those living in Europe ended up buying houses 3.1% more expensive.
Compared to the same period last year, the average value of houses sold in Portugal to buyers living in Portugal was 8% higher. And foreign buyers purchased homes for a similar average price (0.1%). Despite this trend, foreigners continue to buy 41% more expensive homes than those living in Portugal.
14 municipalities see house prices falling at the end of 2023
Fourteen of the 24 municipalities with more than 100,000 inhabitants saw house prices fall between the last quarter of 2024 and the previous quarter. The biggest falls were felt in Matosinhos (-14.4%), followed by Porto (8.7%), Funchal (8.4%) and Barcelos (-8.1%). And the smallest falls in the cost of housing in this period were felt in Vila Nova de Gaia (-0.8%) and Lisbon (-1.9%).
In year-on-year terms, "there was a slowdown in house prices in 18 of the 24 municipalities with more than 100,000 inhabitants, including all the municipalities in Greater Lisbon, the Setúbal Peninsula, with the exception of Seixal, and the Porto Metropolitan Area, with the exception of Maia", INE points out. In the municipality of Porto, house prices continued to rise at a slower pace (down 11.9 percentage points) and the same was observed in Lisbon (-5.7 percentage points).
In the other 6 most populous municipalities, house price growth accelerated, with Maia (up 7.8 percentage points) and Vila Nova de Famalicão (up 6.5 percentage points) standing out. "Oeiras was the only municipality to record a decrease in the median house price compared to the same quarter last year, of 2.8%," reads the document.
Unsurprisingly, the municipalities of Cascais (4,176 euros/m2), Lisbon (4,086 euros/m2) and Oeiras (3,096 euros/m2) had the highest house prices in the country. The most populous municipalities with the lowest house prices were Barcelos (1,129 euros/m2), Guimarães (1,233 euros/m2) and Santa Maria da Feira (1,252 euros/m2).
House prices fall in 13 sub-regions of the country
Looking at the country's 26 sub-regions, house prices fell in 13 territories between the last quarter of 2023 and the previous quarter, with the Autonomous Region of Madeira (-11.3%), Alto Tâmega e Barroso (-7.7%) and the Porto Metropolitan Area (-6.6%) leading the declines. The same was felt in Greater Lisbon, although to a lesser extent (-2.4%).
On the other hand, houses became more expensive in 9 territories during this period, with three sub-regions of the Alentejo leading the increases. In the Coimbra Region and Ave, prices remained practically stable.
In year-on-year terms, "the average house price increased in 23 of the 26 sub-regions, with the West showing the highest growth (16.7%)," says INE. The three territories where the price of houses sold fell were the Douro (-15%), Alto Tâmega (-3.9%) and Beira Baixa (-1.2%).
"In the period under review, the Greater Lisbon (2,728 euros/m2), Algarve (2,623 euros/m2), Setúbal Peninsula (1,952 euros/m2 ), Madeira Autonomous Region (1,869 euros/m2 ), Porto Metropolitan Area (1,776 euros/m2 ) and Alentejo Litoral (1,674 euros/m2 ) sub-regions recorded higher house prices than the country," it adds. And it emphasises that "as in previous quarters, Alto Alentejo had the lowest median sales price for family housing (520 euros/m2)".
