Key information about House Prices Growth

• Portugal house prices grew 9.8% YoY in Sep 2024, following an increase of 7.8% YoY in the previous quarter.
• YoY growth data is updated quarterly, available from Mar 2010 to Sep 2024, with an average growth rate of 7.6%.
• House price data reached an all-time high of 13.2% in Jun 2022 and a record low of -8.3% in Jun 2012.

Building contractors and developers depend on various socio-economic factors, including property values, underlying sentiment in the housing market, the degree of optimism among downstream businesses and credit conditions. All of these drivers typically track in line with economic sentiment, with recent economic shocks spurring a difficult period for building contractors and developers. Nonetheless, the enduring need for building services, particularly to tackle housing shortages across the continent, ensures a strong foundation of work. Revenue is forecast to grow at a compound annual rate of 2.3% to reach €1.3 trillion over the five years through 2025. Operational and supply chain disruption caused by the pandemic reversed the fortunes of building contractors and developers in 2020, as on-site activity tumbled and downstream clients either cancelled, froze or scaled back investment plans. Aided by the release of pent-up demand and supportive government policy, building construction output rebounded in 2021. Excess demand for key raw materials led to extended lead times during this period, while input costs recorded a further surge as a result of the effects of rapidly climbing energy prices following Russia’s invasion of Ukraine. Soaring construction costs and the impact of interest rate hikes on both the housing market and investor sentiment led to a renewed slowdown in building construction activity across the continent. However, falling inflation and the start of an interest rate cutting cycle have spurred signs of a recovery in new work volumes, supporting anticipated revenue growth of 2.3% in 2025. Revenue is forecast to increase at a compound annual rate of 6.7% to €1.7 trillion over the five years through 2030. Activity is set to remain sluggish in the medium term, as weak economic growth and uncertainty surrounding the impact of the volatile global tariff environment on inflation and borrowing costs continue to weigh on investor sentiment. Contractors and developers will increasingly rely on public sector support, including measures to boost the supply of new housing, as countries seek to tackle severe housing shortages. Meanwhile, the introduction of more stringent sustainability requirements will drive demand for energy retrofits.

During the observed period, the data Portugal's new housing construction cost index reached nearly *** points by January 2025, reflecting a significant increase from the base year of 2021. This overall rise in construction costs includes increases in the indexes of both materials and, especially, labor cost in the construction sector. Trends in residential construction The proportion of one-dwelling residential construction in Portugal has grown steadily since 2017, accounting for ** percent of new builds in 2023. This trend coincides with a decrease in mostly non-residential construction, which fell to its lowest share of approximately ** percent in the same year. The northern region of Portugal has emerged as a hotspot for new housing, completing over ****** new dwellings for family housing in 2023, while Greater Lisbon saw a preference for three-bedroom dwellings in new constructions. Housing market dynamics Despite the growing construction costs, Portugal's residential property sector is performing confidently, which is reflected in rising residential construction permits. The number of permits issued for residential property construction, which had declined sharply from nearly ****** in 2007 to less than ****** in 2020, rebounded to almost ****** in 2023, an uptick that does not match Portugal’s severe housing problems.

In 2021, the Portuguese market for residential, commercial and industrial lighting fixture was finally on the rise to reach $X for the first time since 2018, thus ending a two-year declining trend. Over the period under review, consumption continues to indicate a prominent expansion. Consumption of peaked at $X in 2018; however, from 2019 to 2021, consumption failed to regain momentum.

In Lisbon, Portugal, the Lisbon city itself registered the highest prime rent per square meter, at **** euros in 2023. Montijo and Alcochete compounded the zone of the city with the highest prime rent increase, going from **** euros in 2021 to * euros in 2022 and to **** euros in 2023. However, this zone was the least expensive in Lisbon.

Portugal Ref. Year = 2021: GDP: Volume: Gross Capital Formation: GFCF: Housing data was reported at 9.127 EUR bn in Dec 2026. This records an increase from the previous number of 9.045 EUR bn for Sep 2026. Portugal Ref. Year = 2021: GDP: Volume: Gross Capital Formation: GFCF: Housing data is updated quarterly, averaging 8.914 EUR bn from Mar 1970 (Median) to Dec 2026, with 228 observations. The data reached an all-time high of 19.170 EUR bn in Mar 2000 and a record low of 5.185 EUR bn in Mar 1970. Portugal Ref. Year = 2021: GDP: Volume: Gross Capital Formation: GFCF: Housing data remains active status in CEIC and is reported by Organisation for Economic Co-operation and Development. The data is categorized under Global Database’s Portugal – Table PT.OECD.EO: GDP by Expenditure: Volume: Forecast: OECD Member: Quarterly.

Portugal, Canada, and the United States were the countries with the highest house price to income ratio in 2024. In all three countries, the index exceeded 130 index points, while the average for all OECD countries stood at 116.2 index points. The index measures the development of housing affordability and is calculated by dividing nominal house price by nominal disposable income per head, with 2015 set as a base year when the index amounted to 100. An index value of 120, for example, would mean that house price growth has outpaced income growth by 20 percent since 2015. How have house prices worldwide changed since the COVID-19 pandemic? House prices started to rise gradually after the global financial crisis (2007–2008), but this trend accelerated with the pandemic. The countries with advanced economies, which usually have mature housing markets, experienced stronger growth than countries with emerging economies. Real house price growth (accounting for inflation) peaked in 2022 and has since lost some of the gain. Although, many countries experienced a decline in house prices, the global house price index shows that property prices in 2023 were still substantially higher than before COVID-19. Renting vs. buying In the past, house prices have grown faster than rents. However, the home affordability has been declining notably, with a direct impact on rental prices. As people struggle to buy a property of their own, they often turn to rental accommodation. This has resulted in a growing demand for rental apartments and soaring rental prices.

In 2022, Portugal overturned the sinking mortgage interest rate it had gone through during the coronavirus (COVID-19) pandemic. The country did not escape from the overall trend of falling mortgage interest rates observed in Europe during the COVID-19 crisis, which positioned national mortgage interest rates at **** percent in the fourth quarter of 2021. Interest rates as a weapon against inflation Even though interest rates are affected by economic growth, monetary policies, the bond market, the stability of lenders, and the overall conditions of the housing market, inflation currently leads the European Central Bank (ECB)’s decisions regarding them. As inflation had been low in Europe since the 2008 financial crisis, the ECB lowered interest rates in an attempt to promote economic growth. However, the economic difficulties brought up by the coronavirus pandemic and the Russian-Ukrainian war have fueled inflation. To counteract this rise, the ECB increased interest rates. Portugal’s abrupt rise in interest rates on new residential loans from **** percent in 2021 to **** percent in 2023 demonstrates the balanced and calculated act between the two financial indices. High interest rates and low mortgage lending Compared to other European nations, Portugal has a low gross residential mortgage lending. In the third and fourth quarters of 2022, mortgage lending decreased in the country due to rising interest rates and worsening economic conditions, but have increased dramatically until 2024. Despite being in a rising trajectory in terms of outstanding residential mortgage lending since the second quarter of 2021, 2023 registered decreasing figures caused by the same economic contingencies. 2024 shows a different trend, however.

In 2024, the Portuguese market for bearing housings not incorporating ball or roller bearings, plain shaft bearings decreased by -5.2% to $49M for the first time since 2021, thus ending a two-year rising trend. Overall, consumption, however, recorded a resilient increase. Over the period under review, the market hit record highs at $52M in 2023, and then declined in the following year.

In Portugal, the industrial and logistics market has grown over recent years. In the first half of 2019, the take-up amounted to almost 74,000 square meters. From then on, it increased until the first half of 2021. By the first half of 2023, take-up volume was 308,000 square meters, which represented a growth of 93 percent compared to the same period of the previous year. In 2024, the take-up was over 600,800 square meters.

Google Mobility Changes: Residential: Portugal: Guarda District data was reported at 3.000 % in 30 Sep 2022. This records a decrease from the previous number of 6.000 % for 29 Sep 2022. Google Mobility Changes: Residential: Portugal: Guarda District data is updated daily, averaging 4.000 % from Feb 2020 (Median) to 30 Sep 2022, with 839 observations. The data reached an all-time high of 35.000 % in 01 Jan 2021 and a record low of -6.000 % in 14 Aug 2021. Google Mobility Changes: Residential: Portugal: Guarda District data remains active status in CEIC and is reported by Google LLC. The data is categorized under Global Database’s Portugal – Table PT.Google.GM: Mobility Trends: Residential.

Google Mobility Changes: Residential: Portugal: Vila Real District: Vila Real data was reported at 3.000 % in 30 Sep 2022. This records a decrease from the previous number of 5.000 % for 29 Sep 2022. Google Mobility Changes: Residential: Portugal: Vila Real District: Vila Real data is updated daily, averaging 5.000 % from Feb 2020 (Median) to 30 Sep 2022, with 761 observations. The data reached an all-time high of 39.000 % in 01 Jan 2021 and a record low of -6.000 % in 02 Jul 2022. Google Mobility Changes: Residential: Portugal: Vila Real District: Vila Real data remains active status in CEIC and is reported by Google LLC. The data is categorized under Global Database’s Portugal – Table PT.Google.GM: Mobility Trends: Residential.

After a long period of steady increase in real estate prices in Spain, the market was hit by the global financial crisis of 2007, resulting in the burst of the Spanish property bubble. House prices have since picked up and in 2023, the average square meter price reached 2,809 euros - just slightly below 2008 levels. Though prices have risen across the whole country, some regions, such as the Balearic Islands, Catalonia, Madrid, and Andalusia, experienced faster growth than others. Additionally, the gap between newly built and existing home prices has widened. Spain’s real estate market behind others The property market has made great progress, but it is still far off the rest of its European counterparts, and it is positioned, in fact, at the bottom of the European list of the EMF’s house price index, which is led by Czechia and Portugal. Supply is a major factor influencing the price development. Many European countries suffer housing shortages due to sluggish construction activity, and Spain is no exception. In 2022, ranked among the countries with the lowest number of residential construction starts per 1,000 citizens in Europe. Buying vs renting As happens with many other countries, the affordability of buying a home and renting will differ considerably dependent on the area. In 2022, the average Spanish citizen needed between five and 18 years to purchase an average priced property in their region with their full salary, with Murcia and La Rioja being the most affordable regions. The house price to rent index shows that house price growth has been much faster than rental growth. That is good news for homeowners whose homes appreciate over time, but an issue for renters who are yet to purchase a property.

Amsterdam is set to maintain its position as Europe's most expensive city for apartment rentals in 2025, with median costs reaching 2,500 euros per month for a furnished one-bedroom unit. This figure is double the rent in Prague and significantly higher than other major European capitals like Paris, Berlin, and Madrid. The stark difference in rental costs across European cities reflects broader economic trends, housing policies, and the complex interplay between supply and demand in urban centers. Factors driving rental costs across Europe The disparity in rental prices across European cities can be attributed to various factors. In countries like Switzerland, Germany, and Austria, a higher proportion of the population lives in rental housing. This trend contributes to increased demand and potentially higher living costs in these nations. Conversely, many Eastern and Southern European countries have homeownership rates exceeding 90 percent, which may help keep rental prices lower in those regions. Housing affordability and market dynamics The relationship between housing prices and rental rates varies significantly across Europe. As of 2024, countries like Turkey, Iceland, Portugal, and Hungary had the highest house price to rent ratio indices. This indicates a widening gap between property values and rental costs since 2015. The affordability of homeownership versus renting differs greatly among European nations, with some countries experiencing rapid increases in property values that outpace rental growth. These market dynamics influence rental costs and contribute to the diverse rental landscape observed across European cities.

The house price to income index in Europe declined in almost all European countries in 2023, indicating that income grew faster than house prices. Portugal, Luxembourg, and the Netherlands led the house price to income index ranking in 2023, with values exceeding *** index points. Romania, Bulgaria, and Finland were on the other side of the spectrum, with less than 100 index points. The house price to income ratio is an indicator for the development of housing affordability across OECD countries and is calculated as the nominal house prices divided by nominal disposable income per head, with 2015 chosen as a base year. A ratio higher than 100 means that the nominal house price growth since 2015 has outpaced the nominal disposable income growth, and housing is therefore comparatively less affordable. In 2023, the OECD average stood at ***** index points.

Google Mobility Changes: Residential: Portugal: Guarda District: Guarda data was reported at 1.000 % in 28 Sep 2022. This records a decrease from the previous number of 2.000 % for 27 Sep 2022. Google Mobility Changes: Residential: Portugal: Guarda District: Guarda data is updated daily, averaging 4.000 % from Feb 2020 (Median) to 28 Sep 2022, with 662 observations. The data reached an all-time high of 37.000 % in 01 Jan 2021 and a record low of -7.000 % in 30 Jul 2022. Google Mobility Changes: Residential: Portugal: Guarda District: Guarda data remains active status in CEIC and is reported by Google LLC. The data is categorized under Global Database’s Portugal – Table PT.Google.GM: Mobility Trends: Residential.

Google Mobility Changes: Residential: Portugal: Viseu District data was reported at 3.000 % in 30 Sep 2022. This records a decrease from the previous number of 5.000 % for 29 Sep 2022. Google Mobility Changes: Residential: Portugal: Viseu District data is updated daily, averaging 5.000 % from Feb 2020 (Median) to 30 Sep 2022, with 955 observations. The data reached an all-time high of 45.000 % in 10 Apr 2020 and a record low of -5.000 % in 15 Aug 2021. Google Mobility Changes: Residential: Portugal: Viseu District data remains active status in CEIC and is reported by Google LLC. The data is categorized under Global Database’s Portugal – Table PT.Google.GM: Mobility Trends: Residential.

Google Mobility Changes: Residential: Portugal: Viseu District: Tondela data was reported at 4.000 % in 28 Sep 2022. This records a decrease from the previous number of 6.000 % for 27 Sep 2022. Google Mobility Changes: Residential: Portugal: Viseu District: Tondela data is updated daily, averaging 4.000 % from Sep 2020 (Median) to 28 Sep 2022, with 326 observations. The data reached an all-time high of 11.000 % in 12 Sep 2022 and a record low of -3.000 % in 05 Nov 2021. Google Mobility Changes: Residential: Portugal: Viseu District: Tondela data remains active status in CEIC and is reported by Google LLC. The data is categorized under Global Database’s Portugal – Table PT.Google.GM: Mobility Trends: Residential.