House prices in the eurozone were up 6.8% in the year to Q3 2022, whilst prices in the European Union rose by 7.4% on average.
Out of the 27 Member States, 15 EU countries registered a house price growth of more than 10% year-over-year. The EU countries with the largest increases in house prices were Estonia (24.2%), Hungary (21.0%), and Lithuania (19.3%). Denmark was the only country to experience negative growth, with prices falling by -2.4%.
Portugal had the 11th largest increase in the EU with a 13.1% annual upsurge in house prices. The country experienced a similar increase in the previous quarter (13.2%), preceded by a strong 12.9% growth rate at the beginning of the year.
Today, the average price of a property in Portugal stands at approx. $135 per square foot. Studio and one-bedroom homes will cost you around $168 per square foot, whilst two-bedroom properties are priced at around $144/sqft. Three-bedrooms go for $125/sqft, and properties with four bedrooms or more will cost you $108/sqft.
What is Driving Portugal’s House Price Growth?
The country’s supply of available homes is still falling, largely due to rising construction costs. Portugal’s housing stock fell by 19% in the year to Q4 2022 (idealista). The highest stock decline was in Porto (-38%) followed by Guarda (-32%) and the capital, Lisbon (-31%).
Despite rising inflation, cost of living and mortgage rates, demand for homes still outweighs supply—especially in major cities where the population is growing and stock is shrinking. This is naturally pushing real estate values up.
According to Knight Frank, property prices in the capital saw a y-o-y growth of 11.4% in the summer of 2022, whilst prices in Porto were up by 15.7%.
Foreign Investment in Portugal
With Portugal positioned as one of the hottest real estate markets in the world right now, foreign investors are flooding in. Its attractive property prices and low cost of living compared to its European neighbours are helping to maintain an influx of overseas buyers into Portugal.Last year, investment from Portugal’s Golden Visa program was up 42% compared to 2021 and equated to €654.2 million in total.
Overseas buyers tend to have more buying power than the local population and are more likely to make all-cash purchases. While Portuguese locals spend €1,372 per square metre on average, foreigners pay €2,234 per square metre, which is almost 40% more nationally.
Ultimately, with their big budgets and all-cash investments, international investors are helping to maintain a stable, healthy housing market in Portugal.
Growing demand from both domestic and overseas buyers, combined with a serious shortage of homes on the market, is keeping price growth high across the country. It also puts Portugal in a good position to weather the storm of a temporary fall in house prices, which is expected to affect major markets around the world in 2023.
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FAQs
Portugal had the 11th largest increase in the EU with a 13.1% annual upsurge in house prices. The country experienced a similar increase in the previous quarter (13.2%), preceded by a strong 12.9% growth rate at the beginning of the year.
Why are house prices so high in Portugal? ›
According to Fitch's estimates, (nominal) house prices are expected to grow annually by between 4 and 6 per cent in Portugal and between 3 and 5 per cent in Spain. This dynamic will be fuelled by "persistent limitations in housing supply", especially in less populated areas.
Which country has the fastest growing house prices? ›
Turkey experienced the highest annual change in house prices in 2023, followed by Lithuania and Croatia. In the second quarter of the year, the nominal house price changed by 96 percent. One of the main reasons behind the soaring house prices is the high inflation in Turkey and many other countries.
Is it worth buying property in Portugal? ›
Buying Portugal real estate to rent is an excellent financial investment. It is worth it as there is more demand for accommodation than what is currently available — especially in Lisbon and Porto. Also, rental yields during peak tourism season make property rental in Portugal a viable investment.
Is property more expensive in Spain or Portugal? ›
Is property cheaper in Spain or Portugal? Property in Portugal is cheaper than in Spain, and with attractive rental yields in Lisbon and the Algarve, you can understand why Portugal is such a popular choice for investors.
Is it cheaper to live in Portugal than the US? ›
The average cost of living in Portugal is around €1,500 per month, depending on where in Portugal you live. Portugal is considered one of the most affordable countries in Western Europe and is, on average, 40.8 percent cheaper than living in the United States.
Why are Americans buying property in Portugal? ›
Typically this interest has surged from homeowners in the American Eastern and Western coasts widely due to Portugal's serene western location resembling their lifestyle. Many are now looking at Portugal's Golden Visa program and the various options including fund products and real estate solutions.
Which country has the best quality houses? ›
The country with the most beautiful houses in the world is Greece. With a rating of 79.5 out of 100, they range from traditional island houses, many of which are painted white and have bright blue domes, to modern Greek houses built with stone and influenced by Bauhaus and art deco architectural styles.
Which country has the most unaffordable housing? ›
Hong Kong was crowned the most unaffordable market in the world, followed by Sydney, Australia then Vancouver. A total of 11 markets, including Vancouver, were deemed “impossibly unaffordable,” meaning median house prices are more than nine times the median household income.
Are property taxes high in Portugal? ›
Municipal Property Tax in Portugal
Most regions charge IMI based on 0.3% to 0.45% against the property's assessed value, although rural property owners usually pay a higher 0.8% rate.
Which region should you choose? It makes sense to consider buying a property on the Algarve coast as this is a popular destination due to the climate, beaches and culture. If you want to experience life in a beautiful coastal area where many other foreigners have bought a home, the Algarve is for you.
Why are houses so expensive in Portugal? ›
According to the report, today, there are more than 700 thousand foreigners living in Portugal and who value factors such as the climate, low crime rate and the beauty of the Portuguese coast. And they prefer, above all, to buy houses close to Lisbon and Cascais.
Is food cheaper in Spain or Portugal? ›
Cost of living in Spain vs Portugal
If you belong to this category, the cost of health insurance is €30- €50 a month. On average, the cost of living in Spain is 4.3% more expensive than in Portugal, with Spain being cheaper on average for public transport and grocery costs.
Is it cheaper to retire in Spain or Portugal? ›
While the cost of living is generally lower in Portugal, Spain offers higher minimum salaries and a growing economy with more job opportunities in booming industries. Portugal has a more expat-friendly process for residency and citizenship, including the golden visa program and Non-Habitual Residency tax benefits.
What is the average house cost in Portugal? ›
Today, the average price of a property in Portugal stands at approx. $135 per square foot. Studio and one-bedroom homes will cost you around $168 per square foot, whilst two-bedroom properties are priced at around $144/sqft.
What is the housing problem in Portugal? ›
Faced with a housing shortage and growing popular discontent, the government plans to place state-owned properties on the market, lower the value-added tax rate for construction of homes to 6%, and provide incentives for developers to build homes to rent.
Why are there so many empty houses in Portugal? ›
Experts point out the main reason for abandoned houses is that owners are not required to use houses or use them properly to bear the tax burden, namely, "funny IMI" (real estate tax). They believe it is necessary to change the legislation to force the owners to "move."
With Portugal positioned as one of the hottest real estate markets in the world right now, foreign investors are flooding in. Its attractive property prices and low cost of living compared to its European neighbours are helping to maintain an influx of overseas buyers into Portugal.Last year, investment from Portugal’s Golden Visa program was up 42% compared to 2021 and equated to €654.2 million in total.
