skyrocketing housing costs in portugal: a breakdown
Here's the lowdown on Portugal's real estate market:
Real estate prices surge by 7.4%
In the previous months, Portugal's residential property prices have ascended, with a striking increase of 7.4% year-on-year in May, identical to the April surge [source]. Quarterly, house prices in Portugal surged by an impressive 4%.
Front-runners and Trendsetters:
Fifteen district capitals or autonomous regions witnessed an increase in house prices in May. Leading the way were Beja (up by 28.8%), Ponta Delgada (up by 19.2%), Setúbal (up by 18.7%), and Santarém (up by 16%). Additionally, house prices hiked in Guarda (12.3%), Coimbra (12.2%), Faro (11.3%), Évora (11%), Funchal (6.5%), Braga (6%), Porto (5.9%), Leiria (4.3%), Portalegre (3.3%), Lisbon (1.8%), and Bragança (1.2%) [source].
Stable prices:
In contrast, the cost of housing remained stable in Aveiro between May 2025 and the same period in 2024, increasing by a minor 0.4%. On the flip side, prices dropped in Viseu (-4.9%), Viana do Castelo (-2.4%), and Castelo Branco (-1.1%) [source].
Top-tier cities:
Lisbon remains the priciest city to buy a house, with an average cost of 5,720 euros per square meter. Porto (3,768 euros/m2) and Funchal (3,574 euros/m2) follow closely. Next, Faro (3,289 euros/m2), Setúbal (2,800 euros/m2), Aveiro (2,526 euros/m2), Évora (2,411 euros/m2), Ponta Delgada (2,174 euros/m2), Coimbra (2,079 euros/m2), Braga (2,049 euros/m2), Viana do Castelo (1,887 euros/m2) and Leiria (1,613 euros/m2) round out the list [source].
Bargain-hunters' paradise:
For those seeking more affordable options, consider Portalegre (840 euros/m2), Castelo Branco (893 euros/m2), Guarda (914 euros/m2), Bragança (977 euros/m2), Beja (1,192 euros/m2), Santarém (1,415 euros/m2), and Viseu (1,471 euros/m2) [source].
Consider this:
- High demand: Portugal's high-demand areas, such as Lisbon and the Algarve, are experiencing a shortage of housing stock, especially for high-quality properties, putting pressure on prices [source].
- International buyers: Lifestyle attractiveness, climate, and relatively low cost of living are drawing international buyers, particularly from the UK, Ireland, France, and Germany [source].
- Construction costs: The rise in labor costs is a significant factor in increasing construction costs, which can impact housing prices. However, material costs have stabilized [source].
- Amidst Portugal's skyrocketing housing costs, investors might find opportunities in less expensive regions like Portalegre, Castelo Branco, Guarda, Bragança, Beja, Santarém, and Viseu, with real estate prices ranging from 840 euros to 1,471 euros per square meter.
- In the finance world, Portugal's real estate market is attracting international investors due to its lifestyle, climate, and relatively low cost of living, particularly from the UK, Ireland, France, and Germany. However, high-demand areas like Lisbon and the Algarve, with a shortage of high-quality properties, may pose challenges for investors.
