Housing Market Overview
In October 2024, property prices in Portugal hit a record high, with the median price of homes soaring by 12% year-on-year to €1,721 (US$1,819) per square metre, according to the Instituto Nacional de Estatística (INE). This marked the highest median house price ever recorded in the country.
Property prices in Portugal have been on a strong upward trajectory for several years, rising by an average of 9.2% annually between 2017 and 2023. When adjusted for inflation, house prices nationwide grew by 9.5% compared to the same period last year.
After a sharp decline from 2009 to 2013, caused by the global financial crisis and the eurozone debt crisis, property prices began recovering in 2014 and have steadily increased since. Key annual growth rates include 4.9% in 2015, 5.7% in 2016, and 13.5% in 2022. While growth slowed to 5.4% in 2023, it has picked up pace again in 2024.
Regional Breakdown
In Grande Lisboa, prices climbed by 11.2% (8.7% adjusted for inflation) to €2,523 (US$2,666) per square metre in October 2024. Other regions also saw significant increases:
- North: Up 13.2% (10.7% in real terms) to €1,472 (US$1,555) per sq. m.
- Centre: Increased by 8.8% (6.3% in real terms) to €1,125 (US$1,189) per sq. m.
- Oeste e Vale do Tejo: Rose by 13% (10.4% in real terms) to €1,288 (US$1,361) per sq. m.
- Península de Setúbal: Grew by 11.3% (8.7% in real terms) to €1,938 (US$2,048) per sq. m.
- Alentejo: Modest growth of 4.5% (2.1% in real terms) to €1,114 (US$1,177) per sq. m.
- Algarve: Prices rose by 10.1% (7.6% in real terms) to €2,321 (US$2,453) per sq. m.
- Azores Islands: Increased by 7.2% (4.8% in real terms) to €1,295 (US$1,368) per sq. m.
- Madeira: The highest growth at 17.4% (14.7% in real terms), reaching €2,010 (US$2,124) per sq. m.
By property type, apartment prices rose by 12.9% year-on-year to €1,920 (US$2,029) per sq. m., while house prices increased by 9.8% to €1,317 (US$1,392) per sq. m.
Market Drivers
The surge in house prices is largely supported by rising demand. In the first half of 2024, the number of housing transactions rose by 3.1% year-on-year to 70,202 units, reversing an 18.7% decline in 2023. Similarly, the total transaction value increased by 6.1% to €14.61 billion, following an 11.9% drop the previous year.
“The outlook for 2024 is more positive. We anticipate investment volumes to grow by up to 15% compared to 2023, particularly in the second half of the year,” according to CBRE’s 2024 Portugal Real Estate Market Outlook.
Residential Construction Trends
The residential construction sector remains steady. In 2023, the number of licensed dwellings rose by 6% to 32,053 units, continuing growth seen in 2022 (3.2%) and 2021 (12%). However, in the first three quarters of 2024, licensed dwellings fell slightly by 1.4% year-on-year to 24,611 units.
Completions followed a similar pattern, with increases of 3% in 2022 and 6.8% in 2023. In the first half of 2024, completions were up by 3.2% year-on-year to 12,193 units.
Economic Context
Despite a thriving property market, Portugal’s economy is struggling. Real GDP growth slowed to 2.3% in 2023 after stronger expansions in 2022 (6.8%) and 2021 (5.7%). Weak demand from major trading partners has kept growth subdued, with GDP rising just 1.5% in Q1, 1.6% in Q2, and 1.9% in Q3 of 2024.
Projections for 2024 suggest GDP growth will remain low, with the European Commission forecasting 1.7% growth this year and 1.9% in 2025. The IMF offers a slightly more optimistic outlook, predicting 1.9% growth this year and 2.3% in 2025. Banco de Portugal estimates a growth rate of 1.6% for 2024, improving to 2.1% next year.