House prices see record surge at start of 2025
Prices rose across the board, with new homes increasing by 14.5% and resale homes jumping 17%, both the highest increases ever recorded by INE.
Portugal’s housing market saw record-breaking growth in the first quarter of 2025, with home prices rising at their fastest pace since records began.
New data from the National Statistics Institute (INE) shows prices increased by 16.3% year-on-year, the steepest rise since the INE began tracking the index in 2009.
Over 41,000 homes were sold between January and March, a 25% increase compared to the same period last year, pushing the average home price above €232,000, a new all-time high.
The dramatic rise in prices coincided with the full rollout of a government-backed public guarantee scheme aimed at helping young people purchase their first home.
The measure, introduced by Prime Minister LuÃs Montenegro’s administration, allows buyers under 35 to access mortgage loans covering up to 100% of a property’s value, surpassing the typical 90% cap set by the Bank of Portugal.
The initiative has seen strong uptake: 44% of mortgage credit granted to young buyers in Q1 2025 was issued under the program.
It was accompanied by other incentives, including exemptions from property transfer tax (IMT), stamp duty, and registration fees, for first-time homebuyers under 35.
While these policies boosted demand, the lack of corresponding growth in housing supply led to intensified price pressures, a trend real estate operators had already warned about in late 2024.
New Homes and Resales Both Surge in Price
Prices rose across the board, with new homes increasing by 14.5% and resale homes jumping 17%, both the highest increases ever recorded by INE.
Quarter-on-quarter, prices grew by 4.8%, also a record for a single quarter.
The total value of housing transactions during the period exceeded €9.6 billion, representing a 43% increase from the same quarter in 2024.
Regional Disparities Persist
The Lisbon metropolitan area saw the highest average prices, with over 8,000 homes sold for more than €3 billion total, pushing the average price to €381,000.
In the Algarve, the average price hit €336,000, a 6% annual rise.
However, the most dramatic increase occurred in the Madeira region, where prices surged nearly 29%, reaching an average of €297,000.
By contrast, the Alentejo remained the most affordable region, with homes averaging €123,000, though even this represented a 12% increase year-on-year.
Foreign Buyers Losing Market Share
While foreign buyers still pay significantly higher prices, their share in the market has declined.
In Q1 2025, domestic buyers accounted for nearly 95% of all home purchases and 91.8% of total transaction value, up from 93.7% and 89.7%, respectively, a year earlier.
Still, international buyers paid an average of €376,500 per home, over 67% more than the €224,800 average paid by domestic buyers, continuing to exert upward pressure on prices in certain areas.
Background: A Decade of Growth
Portugal’s housing price index has risen continuously since late 2013.
After a brief slowdown in 2022, price growth began accelerating again in mid-2024, driven by government incentives and resilient demand.
With demand still outpacing supply and new policy-driven demand drivers in place, the housing market shows no immediate signs of cooling, prompting renewed calls from economists and housing advocates for urgent supply-side interventions.