As expected, the Portuguese real estate market saw continued growth in 2024, with house prices in some regions hitting historic levels.The total number of housing transactions reached 148,434, marking a 13.1% increase compared to the previous year. Favorable economic conditions, a rise in foreign investment, lower mortgage taxes, and new government policies have all contributed to shaping a market full of both challenges and opportunities. While forecasts suggest that prices will keep rising in 2025, these trends may help balance the market in the coming months.
Indicators of Property Price Growth in 2024
According to the latest report from INE (Instituto Nacional de Estatística), the median price for family homes reached €1,819 per square meter in the third quarter of 2024. When compared to the same period in 2023, the increase was 10.8%.
The last quarter alone saw 41,737 property sales, a 27.2% increase from 2023, showing that despite rising prices, the market remains very active and attractive. Once again Lisbon, Porto, and the Algarve lead the market, while more peripheral and emerging areas will offer interesting opportunities for those looking for more affordable prices, like Golden Coast and Alentejo.
The construction sector also grew 5.1% in December 2024, marking Portugal the fourth-largest increase among the 27 EU countries.
Why Are House Prices Going Up?
The biggest reason is that there aren’t enough homes on the market to meet the growing demand. On top of this, Portugal’s economy, cost of living, security, favorable tax incentives, and programs like Golden Visa make it a very attractive choice for local buyers and international investors.
Tourism is also playing a significant role, as many property owners are opting to turn their homes into short-term rentals rather than offering them for long-term leases. This reduces the number of homes available for buyers and renters and adds more pressure to the market.
Additionally, the rising costs of materials and labor over the years, driven by an uncertain global economic environment, have made new homes and renovations more expensive. While mortgage interest rates have recently gone up, many buyers were drawn to the market by historically low rates in previous years.
All of this makes the market pretty competitive, but if you’re looking to find a home in Portugal, getting advice from an expert like us can definitely help you navigate the process! Explore our services.
What’s the Portuguese Government Doing About It?
To address the challenges, the Portuguese government has approved several measures aimed at increasing the offer:
- Construction on Rural Land: A very recent legislative change now permits residential construction on rural land and removes previous restrictions, allowing new residential areas to be developed on rural land. While this reform could help address housing affordability, it has also concerned environmentalists about the potential impact on natural landscapes.
- Short-Term Rentals: The government is tightening regulations on platforms like Airbnb and Booking in an effort to free up more homes for long-term residents. This is aimed at ensuring locals can easily access housing.
- Tax Incentives for Young Buyers: First-time homebuyers under 35 can now benefit from exemptions on IMT and Imposto do Selo for homes valued up to €316,772, and partial exemptions for homes up to €633,453.
- Affordable Housing Programs: A €2.22 billion plan has been launched to build about 33,000 homes by 2030 for low-income families. This is part of a larger effort to construct 59,000 homes by the end of the decade.
What Can We Expect in 2025?
As we have seen in our article about trends and challenges for 2025, the projections indicate that house prices in Portugal are likely to continue rising this year, though the growth rate is expected to slow down. With more housing options available in the market, the government’s initiatives, and adjustments to tax mortgage rates, the market may stabilize in the third quarter.
There is also a digital transformation going on in the real estate market, making the buying and selling process smoother and more accessible than ever. With virtual tours, online property searches, and even digital transactions, buyers can explore options and make informed decisions. This experience helps buyers find the right investment faster and makes it easier to connect with real estate agencies in just one step.
Besides that, digital tools and data-driven insights are speeding up decision-making and streamlining the buying process. With fewer bureaucratic hurdles, transactions are becoming more efficient, allowing buyers and investors to move faster and sellers to reach a wider audience with ease. This shift is not just about innovation; it’s about making real estate more accessible for everyone.
How Can I Know If the House is Fairly Priced?
Price is always a key consideration for buying a house in Portugal, but determining if it’s fair requires searching for online tools and real estate platforms that can make the process a lot easier. Here’s some advice for checking property prices:
- Compare Prices: Platforms like Idealista and Imovirtual can help you see what similar properties are going for in the same area.
- Consider the location: A home near schools, public transport, shops, or parks can be worth more because of the added lifestyle benefits.
- Check the condition and dimension of the property: Homes that are newly renovated or well-maintained usually cost more, but a fixer-upper might give you room to negotiate a lower price.
Taking the time to look at the listing price will help you make a more informed choice and ensure you’re getting a fair deal on your future home. If you don’t know where to start, contact us.
Conclusion
As we’ve seen, 2024 was a great year for the real estate market. While prices may continue to rise into 2025, the government’s efforts to address housing problems and regulate short-term rentals offer hope for some market balance this year. Let us guide you through the process and help you find the right property in Portugal at the right price.
📩 Get in touch with us today and take the first step toward finding your ideal property in Portugal’s dynamic real estate market!
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- The Evolution of House Prices in Portugal: A Closer Look at the Market in 2024
- Portugal’s Real Estate Market in 2025: Trends and Challenges
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- Guide to Buying a House in Portugal: Simplified Steps for International Investors
