Portugal saw an 86.5 percent increase in house prices over the last decade, the 8th greatest increase in the world, according to new research by money.co.uk.
Portugal’s house prices per square metre rose from £1,228 (€1,431.83) in 2010 to £2,290 (€2,670.11) in 2020, an 86.5 percent increase. However, average wages in the country decreased by -1.30 percent, whilst inflation changed by 1.06 percent.
The study looked at how the average property price in OECD countries has changed over the last 10 years and compared it to the difference in average wages and inflation over the same period, to discover which nations are seeing the cost of property outstrip that of earnings.
The country that has seen the largest increase in property prices over the last decade is Israel, where the average price has risen by 345.7 percent. Standing at £1,553 (€1,811.09) per square metre in 2010, property prices in Israel now average at £6,920 (€8,068.72) per square metre. However, the average wage in the country has only gone up by 17.5 percent over the same time period, whilst the inflation rate was 0.92 percent.
Switzerland ranked second place with property prices increasing by 165.5 percent since 2021. Switzerland is well-known for having a high cost of living, which has clearly increased dramatically over the last ten years, compared to average wages which have only risen by 2.4 percent. Closely following Switzerland was Germany where property prices increased by 162 percent, whilst wages rose by 14.2 percent.
In comparison, four countries actually saw a decrease in house prices over the last decade according to the research. Greece experienced the biggest decrease in prices per square metre (-17.9 percent), however, the country's average annual wage also dropped dramatically by 16.1 percent.
A Spanish solution?
While property prices in Portugal continue to rise, wages have not kept up with the trend, leaving many people in Portugal looking for new solutions.
For some home owners the solution to the problem lies across the border in Spain where the difference in house prices can be as much as 50 percent in some areas.
According to a report by Expresso newspaper: “The rise in house prices is leading the Portuguese to look for housing across the border, since in Spain values for properties are half of those found in Portugal”.
While this has been a trend in countries such as Luxembourg for years, for Portugal this is a new phenomenon. Expresso highlights the case of a house in Chaves in the north of Portugal costing €120,000, while on the other side of the border in Orense, a property can be bought for just €44,000.
Portuguese people who live close to the Spanish border are now increasingly looking to live in Spain while working in Portugal according to Expresso.
Another example of the disparity in house prices and rent between the Iberian neighbours can be seen in the Algarve, where a home can be rented for €600 a month, while across the border a similar property can be rented for half this amount. Meanwhile, it is possible to rent a home on a condominium with a pool, gardens and playground for as little as €450 a month in Spain, while in Portugal it would be hard to find similar for less than €650.
But what is behind this new phenomenon? According to Expresso, in Ayamonte, Andalusia, many of the buildings that were planned for tourism and were abandoned due to the crisis "are now starting to be recovered and finished", so they are now being placed on the market at “attractive” prices, thus helping to lure Portuguese buyers across the border.