New housing construction costs rise 3.9% in Portugal: challenges and impacts on the real estate market
- Redação Mudei e Agora
- Sep 9, 2025
- 2 min read
The National Statistics Institute (INE) reported that, in July 2025, new housing construction costs in Portugal rose 3.9% year-on-year. This seemingly moderate growth hides worrying trends that could significantly alter the course of the Portuguese real estate market.
With housing demand remaining high but supply facing constraints, rising construction costs are becoming a determining factor for final home prices, developer investments, and even Portuguese families' ability to afford housing.
Key figures released by INE:
Overall increase in construction costs: +3.9% in July compared to the same month in 2024.
Labor: registered a significant increase of 5.4%, reflecting a shortage of qualified professionals in the construction sector.
Construction materials: grew 2.8%, influenced by inflation and the rise in the price of raw materials such as steel, cement, and wood.
These figures confirm that the sector faces simultaneous pressures: on the one hand, rising wage costs; on the other, material prices still above pre-pandemic levels.
And why are costs rising?
Labor Shortage
Portugal is experiencing a structural shortage of skilled construction workers. Many have emigrated to other EU countries in search of better wages, and the sector is struggling to attract young people.
Inflation and Logistics
Despite some stabilization in 2025, raw material prices continue to be influenced by global tensions in transportation, energy, and logistics.
Sustainability and Regulation
The requirement for certifications such as LEED and BREEAM has increased initial costs. These practices make buildings more sustainable, but require additional investments in technology and materials.
Impacts on the Real Estate Market
Pressure on Sales Prices
Real estate developers are already estimating a 5 to 8% increase in the final price of homes by the end of the year. This increase will directly impact buyers and investors.
Difficulties in Accessing Housing
Portuguese families, already burdened by low average incomes and high financial burdens, may find home ownership even less affordable.
International Investors
On the other hand, rising costs may not deter foreign investment, especially in premium and tourist segments, where profit margins remain high.
Possible Solutions and Responses
Training and Capacity Building
Investing in technical training programs for construction workers, attracting new professionals to the sector.
Modular Construction and Innovation
Adopting modular construction and innovative methods can reduce costs and lead times.
Government Support
Tax incentive programs and public-private partnerships (PPPs) can accelerate the production of affordable housing.
Outlook for 2025
The trend indicates that construction costs will remain high throughout the year. If measures are not taken to mitigate this pressure, housing prices will continue to rise, pushing the middle class out of the market.
Despite this, opportunities exist: the digitalization of construction, the introduction of new technologies, and cooperation between the government and the private sector could balance costs and accelerate the supply of housing.
Conclusion
The 3.9% increase in construction costs may seem small, but its effects are far-reaching: it puts pressure on prices, exacerbates the lack of affordability, and demands innovation and consistent public policies. How Portugal addresses this challenge in the coming years will determine whether the dream of homeownership will remain within reach for most families.
Source: INE / Idealista News
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