Updated: January 17, 2025
While Europe’s housing market has faced a difficult period amidst a challenging economic climate, Portugal has shown itself to be a pillar of stability, strength, and resilience. With high demand, a stable economy, and no restrictions on foreign buyers, Portugal has long been a smart move for foreign property buyers and expats looking for a better quality of life.
Portugal's Housing Market Shows Stronger Growth Amid European Trends
Recent data from the House Price Index (HPI) from Eurostat shows that, across the European Union, there have been challenges for the housing market, with Portugal standing out for its positive performance in contrast.
Last year, in the first quarter of 2024, the euro areas experienced a 0.4 percent decline in house prices compared with the same time period in 2023, while the European Union experienced a 1.3 percent increase. Against this backdrop, Portugal’s property market was shown to be strong among the minority of European Union member states that recorded an annual increase in house prices.
To provide more concrete examples, when you compare Portugal to the European powerhouses of France and Germany, France experienced a 4.8 percent decline in house prices, while Germany fared even worse, with a 5.7 percent decrease in house prices. Luxembourg, which has the third highest GDP per capita, also experienced a decrease of 10.9 percent.
Long-Term Trends in Portugal
Long-term trends of Portugal’s property market have highlighted house prices to have increased at a faster pace than rents, showcasing a high demand for property ownership in Portugal. This has been driven by foreign investment, tourism related purchases, and economic improvements in Portugal.
Portugal also fared well during the COVID-19 pandemic, with the Portugal real estate sector showing itself to be resilient and bouncing back quickly in its aftermath, with property prices currently standing at an all-time-high.
The average asking price in Lisbon’s Metropolitan Area is €4,935, while in Porto’s Metropolitan Area, this price stands at €3,937. If you focus on the Algarve region, the average asking price is €4,385 per square meter.
Alongside, rental yields remain strong in Portugal, another key incentive for foreign buyers to snap up property in the country. Rental yields in the third trimester of 2024 were 6.8 in Lisbon’s Metropolitan Area, 6.6 percent in Porto’s Metropolitan Area, and 5.6 percent in the Algarve, with several locations experiencing rental yields of over 7 percent, such as Setúbal (7.3 percent) and Gondomar (7.2 percent), a municipal close to Porto.
Stability in Transaction Volumes
Portugal’s property market has proved to be stable when it comes to transaction volumes, which is in stark contrast to many other European countries which have experienced significant declines.
France, Ireland, and Slovenia, for example, saw transaction numbers tumble by more than 20 percent year-on-year in the first quarter of 2024. Portugal, on the other hand, managed to maintain a more stable market activity level.
Portugal’s Property Market’s Impressive Run
Portugal’s strong performance is particularly important when observed against the broader European context of rising interest rates and inflationary pressures. These factors have stagnated growth in many EU countries, yet Portugal appears to have navigated these challenges more smoothly and successfully than many other EU countries.
Portugal’s performance reflects the country’s economic stability but also its continued appeal amongst foreign property investors. With the current economic climate, Portugal’s property offers insights into maintaining market dynamism in uncertain and challenges times. In short, Portugal remains a bright spark for property investors in Europe and is projected to see greater interest in 2025. The high quality of life, potential for a strong return on investments, friendly government policies, and residency visa options each continue to play a role in the success of Portugal’s property market.
Looking to make 2025 your year? Find out more about Portugal’s property market.
