Updated: August 8, 2024
House price in Portugal have been increasing rapidly over the past five years, with key cities still clocking in record high property prices. This can be seen to go hand in hand with house sales having doubled over the last decade, highlighting that increased demand has bolstered the real estate market and led to price increases that continue to be moving in an upward trajectory.
House Sales Doubled Over the Last Decade
INE (Portuguese Statistics Office) has stated that home sales, appraisals, and credits have grown in Portugal, highlighting that the Portuguese real estate market has significantly evolved in recent years with increased demand. The Portugal real estate market has moved from strength to strength, emerging as one of the top property investment hubs in the world, with affordable real estate compared to other Western European countries.
Over the past ten years, the number of bank appraisals, new housing loans, and home sales has shown huge growth, highlighting this expansion of the real estate market. But how did these indicators evolve between the first quarter of 2014 and, ten years later, in the first quarter of 2024?
House sales doubled
The number of housing transactions in Portugal has more than doubled, rising by more than 114 percent – from around 15,000 in the first quarter of 2014 to over 33,000 in the first three months of 2024.
New housing loans
The number of new home loans has surged by more than 920 percent over the ten-year period. In the first quarter of 2014, 2,811 new housing loans were issued, compared to a massive 28,694 in the first quarter of 2024.
Bank appraisals
Bank appraisals in Portugal have increased by almost 331 percent when comparing the first quarter of 2014 to the first quarter of 2024.
In the first quarter of 2013, 7,087 assessments were concluded, rising by an incredible 30,523 in the first quarter of 2024.
According to INE, there are many factors at work contributing to this increase, including rising demand and the evolution of interest rates, which encouraged bank financing of property acquisitions until mid-2022.
New mortgage credit contracts
Alongside this, INE stated that, as expected, the growth in bank assessments was accompanied by a significant increase in new mortgage credit contracts. However, INE also notes that the number of mortgage loans is generally lower than the number of bank appraisals in each period because not all appraisals result in credit approval, and some appraisals are related to credit renegotiation. Also, it is worth bearing in mind that, occasionally, there may be more credit contracts than appraisals due to the time lag between the appraisal and the effective start date of the credit.
House Prices Continue to Rise
Perhaps when looked through the same lens as house sales having increased so significantly over the past decade, it should not come as a surprise that house prices in the key cities in Portugal continue to rise as demand continues to outpace supply, although the price increase has slowed.
House prices in Portugal have risen by 2.8 percent in the second quarter of 2024 when compared with the previous quarter.
In 18 district capitals, house prices have become more expensive between April and June 2024. In Ponta Delgada, this increase is most prevalent with prices increasing by 8 percent.
In Lisbon, the Portuguese capital has seen prices increasing by 1.3 percent, while in Porto, the second largest city, has experienced a 0.9 percent price increase.
Other cities where prices increased include:
- Viseu: 5.6 percent increase
- Bragança: 4.6 percent increase
- Santarém: 4.5 percent increased
- Leiria: 4.5 percent increase
- Setúbal: 3.9 percent increase
- Funchal: 3.9 percent increase
- Beja: 3.9 percent increase
- Guarda: 3.8 percent increase
- Évora: 3.5 percent increase
- Faro: 1.8 percent increase
- Aveiro: 1.5 percent increase
- Castelo Branco: 1.4 percent increase
The range of locations, which includes the south, north, center, and in the islands, highlights that price increases are prevalent across Portugal and the autonomous islands. The only district capital exemption where property prices have fallen is Viana do Castelo, in the very north of Portugal, not far from the Spanish border, where houses for sale became more affordable in the second quarter of 2024.
Portugal Real Estate Remains an Attractive Opportunity
Now is an ideal time to invest due to the high demand for accommodation exceeding the available supply, especially in Lisbon and Porto. While prices are increasing on a national level, it is possible to secure incredible properties at affordable rates, particularly when compared with equivalent properties in other Western European countries.
With high rental yields, a sublime climate, and an array of investment options to consider, Portugal looks set to continue to be on the radar of foreign property buyers seeking a smart investment for the foreseeable future.
Considering buying property in Portugal? Check out our ultimate guide!
