House prices continue to climb

New figures from the National Statistics Institute (INE) show that the average home sold in Portugal for €262,839 in the first quarter of 2026. That's 13 percent higher than a year earlier and the highest figure ever recorded.

While demand for housing remains strong, fewer transactions are taking place. Between January and March, a total of 37,745 homes were sold, representing a decline of 8.7 percent compared to the same period last year. Analysts suggest that rising prices, higher borrowing costs and wider economic uncertainty are encouraging many buyers to proceed more cautiously.

Existing homes made up the vast majority of sales at the start of the year. Yet they are no longer the bargain they once were. The average price of a second-hand property climbed to €246,280, setting a new record and adding further pressure on buyers.

The shortage of new housing remains a key issue. New-build properties represented less than one-fifth of all transactions during the quarter, largely due to limited supply. Although sales of new homes declined, their average price still reached a record €330,867.

As affordability pressures increase, many buyers appear to be widening their search beyond Portugal's largest urban centres. Regions such as Oeste and Vale do Tejo, the Setúbal Peninsula, Alentejo and parts of the North continue to attract interest from those seeking lower property prices than those typically found in Lisbon and Porto.

The market is also seeing a continued decline in purchases by non-residents. Foreign buyers and Portuguese citizens living abroad bought fewer properties during the first quarter, continuing a trend that has emerged in recent years following changes to investment and tax incentives. Nevertheless, international buyers remain active in higher-value segments of the market, with the average purchase price for non-residents significantly above the national average.

Government measures may take years to deliver results

The Government has introduced a number of measures aimed at increasing housing supply, including a reduced VAT rate for some new construction projects and reforms to planning and licensing procedures. However, housing experts caution that such policies are unlikely to produce immediate results. New homes take years to plan and build, meaning any improvement in affordability is expected to take time.

For now, the Portuguese housing market remains caught between strong demand and limited supply. While the pace of price growth may be showing early signs of moderation, homeownership continues to move further out of reach for many households as prices remain at historic highs.