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The Evolution of Portugal’s Real Estate Market (2020–2025)
- Antonio Pinheiro
- Aug 29
- 3 min read
1. Robust Price Growth Across Regions
Over the past five years, Portugal has experienced extraordinary property price growth, particularly in major cities and coastal destinations. On average, national property prices have surged by approximately 47% since 2015, with annual growth of 6.2% recorded in Q3 2024 (average price: €1,495/m²).
Specifically:
Porto Metropolitan Area: Prices increased by 61% between 2020 and 2024, with Porto city itself seeing a 50% rise.
Lisbon: By mid-2024, median house prices reached €5,642/m²—a 40% jump since 2015.
Madeira: Emerged as the fastest-growing market in Portugal, with prices reaching €3,050/m² by mid-2024, marking a 16.7% year-on-year increase.
2. Market Dynamics & The Golden Visa Shift
Portugal’s previously high foreign investment influx slowed after policy changes. The Golden Visa program ended real estate investment eligibility in late 2023, shifting the focus toward job creation, funds, and cultural heritage contributions.
By 2024, domestic buyers dominated—93.7% of transactions were made by tax-resident individuals, reflecting a shift away from foreign-driven demand.
3. Supply Constraints & Government Response
Supply has struggled to keep pace with demand: since 2018, only one house has been built for every ten sold. In 2024, the government launched a €2.22 billion initiative to build around 33,000 homes by 2030 targeting low-income families.
Additionally, a draft law now allows construction of housing on rural land, aiming to increase affordable housing—but it also raises environmental and speculation concerns.
4. Cooling Signs Amid Lingering Momentum
While growth remains strong, recent months indicate a modest deceleration. In May 2025, monthly price growth dropped to 0.2%, down from 1.4%Â in April and 2.7%Â in March. Nonetheless, annual growth stayed elevated at 15.1%.
Q1 2025 also showed resilience: 41,358 homes sold (+25% YoY), with transaction value rising 42.9% to €9.6 billion.
5. Regional Differentiation & Market Maturation
Regional performance varies widely:
Lisbon & Porto: Continued strong demand in prime and peripheral areas, with rental yields notably higher in Porto (~5.2% vs Lisbon’s ~3.8%).
Silver Coast & Inland Regions: Silver Coast towns like Nazaré and Óbidos saw 10–15% annual growth. Interior markets like Covilhã are low-cost yet rental-demand rich (€800–1,200/m²) .
Luxury & Coastal Hotspots: Areas like the Algarve, Comporta, Cascais, and Madeira remain attractive luxury destinations.
6. Commercial Real Estate & Institutional Investment Gains
The commercial real estate sector has rebounded strongly in early 2025. Q1 investments soared 151% YoY to €651 million, with retail (59%), hospitality (24%), offices (13%), and logistics (4%) leading the surge.
In tourism-driven areas, hospitality revenues and RevPAR climbed sharply—particularly in Central Portugal and Madeira (with accommodation income rising over 30%).
7. Outlook: A Transitioning, Maturing Market
Looking ahead:
Portugal leads the EU with 16.3% YoY property price growth in Q1 2025.
Foreign investor confidence remains strong: 84% plan expansions, and 77% expect rising appeal through 2028.
Mortgage rates are set to stabilize at around 4% in 2025, aiding affordability.
Green-certified buildings are expected to gain a 25% boost by end-2025, in response to sustainability demand.
Summary
Over 2020–2025, Portugal’s real estate market has demonstrated extraordinary growth powered by both domestic and foreign demand. Price appreciation across cities like Lisbon, Porto, and Madeira has been substantial, while policy shifts (e.g., Golden Visa changes) are redirecting investment dynamics. Despite supply limitations, transaction volumes remain robust. Controlled growth, sustainable development, and regional diversification signal a maturing market that presents opportunities—for both established urban investors and those exploring high-potential alternatives inland or along the coast.
Let’s Connect,
Antonio Pinheiro
+31 (0)6 51760042