The property market in Portugal is going through one of its most challenging periods. Buying a home has never been so expensive: the prices of older homes now rival what new builds cost just a few years ago. This scenario puts many families and young adults in a difficult position: how to achieve the dream of home ownership in a context of limited supply and high demand?

Limited supply and high demand

The lack of homes available for sale is one of the main reasons behind rising prices. In major urban centres such as Lisbon and Porto, supply cannot keep up with demand, which means that any property that enters the market is quickly sold. At the same time, the available stock is dominated by old and run-down homes, making it even harder to find affordable and well-maintained housing.

Housing price trends

House prices in Portugal have been steadily rising in recent years. In 2024, the average price of older homes matched what people were paying for new homes in 2019. This phenomenon results from a combination of factors: growing demand, internal and international migration, changes in household composition, and a lack of new construction. The result is a mismatch between what the market offers and what families actually need.

Market trends and alternatives

Despite the difficulties, the property market continues to show signs of vitality. The number of transactions increased significantly in 2024, but pressure on prices remains, especially in high-demand areas. On the outskirts of major urban centres such as Vila Franca de Xira, Alta de Lisboa, Montijo, Águas Santas, and Prelada, there has been a sharp rise in property values, reflecting the search for more affordable and well-located alternatives.

Rising value of areas outside city centres

Many people are choosing to live in smaller towns or rural areas, where house prices are more affordable and the quality of life tends to be higher. This trend is reinforced by the possibility of remote work and the search for quieter, more sustainable environments.

Sustainability and energy efficiency

Sustainability is becoming an increasingly important factor for homebuyers. Properties with energy certification, solar panels or low-impact construction are gaining prominence in the market. As well as helping to reduce monthly expenses, these features make homes more attractive to buyers and investors, which can positively influence resale values.

Bank financing and challenges for young people

Bank financing remains a barrier for many families, especially younger ones. Although interest rates have recently fallen, they still pose a challenge. The rising cost of construction and a shortage of skilled labour also contribute to higher new-build prices, making them less affordable.

Alternatives to traditional homebuying

Given this context, many families are considering alternatives to the traditional model of home ownership. Renting, although it too has seen price hikes, remains an option for those unable to meet the high upfront costs of buying. Other emerging alternatives include co-living, student residences, and shared housing models, which offer greater flexibility and lower monthly costs.

The role of foreign investment

Foreign investment plays a significant role in the Portuguese property market. Many international investors look to Portugal as a destination to place their capital, drawn by political stability, the climate, and quality of life. This phenomenon adds to the upward pressure on prices, especially in premium areas and urban centres.

Government measures and future outlook

The government has been implementing measures to increase the supply of affordable housing, such as the "Build Portugal" programme and tax incentives for renovations. These initiatives aim to stimulate the construction of new homes and the refurbishment of existing stock, helping to balance supply and demand in the medium term.

Buying a home in Portugal is currently a complex challenge, marked by high prices, limited supply, and increasing demand. However, there are alternatives and strategies that can help make home ownership a reality, from exploring less saturated areas to prioritising sustainability and energy efficiency. The market is constantly evolving, and staying informed is the first step towards making the right decisions and finding the right home at a fair price.

Source: SUPERCASA
General, Taxes and Fees, Real Estate Market, Buy and Sell - Information, Portugal