Portugal leads Europe: house prices rise 16.3% in the first quarter of 2025
- Redação Mudei e Agora
- Sep 9
- 2 min read
The Portuguese real estate market reached a historic milestone in early 2025. According to Eurostat data, Portugal recorded the highest annual house price appreciation in the European Union, with a 16.3% increase in the first quarter, far exceeding the eurozone (5.4%) and EU (5.7%) average.
This result puts Portugal at the center of attention in the European real estate sector, but also raises concerns about sustainability, affordability, and the risk of a housing bubble.
The numbers that put Portugal on the podium:
Annual appreciation: +16.3%, the highest among the 27 EU countries.
Quarterly appreciation: +4.8%, second only to Hungary (+5.2%).
European comparison: The EU average was 5.7%, demonstrating that Portugal nearly tripled the European pace.
This growth is a clear reflection of strong demand pressure in a context of limited supply.
Factors Explaining the Increased Value
International Demand
Portugal has established itself as a destination for foreign real estate investment, thanks to its political stability, quality of life, and residency programs for investors.
Tourism and Digital Nomads
The growth of tourism and the arrival of digital nomads have increased demand for housing, especially in Lisbon, Porto, and coastal regions.
Shortage of Supply
The supply of properties is insufficient compared to demand, partly due to slow permitting and high construction costs.
Macroeconomic Context
The expectation of additional interest rate cuts by the ECB in the second half of 2025 has encouraged investors and buyers, increasing demand.
Impacts on the Domestic Market
Affordability at Risk
Portuguese families with average incomes are facing increasing difficulties in purchasing a home. The average purchase effort already exceeds 40% of income in many regions.
Territorial Inequality
While Lisbon and Porto lead appreciations, inland cities maintain more stable prices, creating a regional divide.
Rental Market
The appreciation in the home buying and selling sector is reflected in rentals, with sharp increases in rents, especially in urban and tourist areas.
Comparison with other EU countries
Countries like Germany and France recorded modest growth, below 5%. Hungary and Poland, however, have trajectories more similar to Portugal's, with growth above 10%.
Portugal, however, stands out as a special case, given its combination of strong international demand and structurally limited supply.
Outlook for 2025
Opportunity for Investors
Continued appreciation reinforces Portugal's attractiveness as a safe and growing market.
Risk of Overvaluation
If growth continues at this pace, experts warn of the risk of a real estate bubble, especially in Lisbon and Porto.
Necessary Public Policies
Accelerating affordable housing programs, fostering urban renewal, and controlling speculation will be essential to balance the market.
Conclusion
The 16.3% increase in house prices in Portugal in the first quarter of 2025 demonstrates the strength of the national market and confirms the country as a European leader.
However, this impressive growth also highlights the challenges: limited affordability, the risk of housing exclusion, and the urgent need for public policies that ensure a balance between international attractiveness and affordable housing for the Portuguese.
The future will depend on Portugal's ability to reconcile foreign investment with structural housing solutions.
Source: Eurostat / Idealista News / The Portugal News
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