Portuguese House Prices Record Largest Annual Increase Since 2022
An announcement of price changes from the property data analysis firm Confidencial Imobiliário has confirmed a significant acceleration in the Portuguese housing market. In June, residential property prices surged by 17.7% compared to the same month in the previous year, representing the most substantial annual increase recorded since 2022. This development indicates renewed momentum in a market that had shown signs of moderation. The report highlights that this spike is the result of accelerating monthly price increases observed throughout the first half of 2025.
A detailed breakdown of price movements by property type shows a clear distinction between new and existing homes. The average price for a newly constructed property reached €3,771 per square meter in the second quarter. In contrast, the price for an existing home was considerably lower, at €2,559 per square meter. This gap underscores the premium that buyers are willing to pay for modern amenities and construction quality. The overall average sale price across all property types in mainland Portugal settled at €2,778 per square meter during this period.
Several factors are contributing to the price changes, including sustained high demand from both domestic and international buyers, coupled with an ongoing shortage of available housing stock. The monthly price variation data shows a 1.8% increase in June, a sharp rebound from the nearly static 0.2% rise seen in May. This volatility suggests a dynamic market reacting to fluctuating supply and demand pressures. For the second quarter as a whole, prices saw a robust increase of 3.4%.
Real estate agency reports and market observations corroborate these findings. Agents across the country, particularly in high-demand areas like Lisbon and the Algarve, have noted intense competition for desirable properties. Buyer and seller behavior has adapted to this environment, with many properties selling quickly and often above the initial asking price. This trend is putting upward pressure on valuations across all market segments.
The mortgage market response and lending conditions have remained relatively stable, though central bank policies on interest rates continue to be a key factor for buyers requiring financing. Property developer reactions to the market pricing trends have been to accelerate new projects where possible, although labor shortages and material costs remain significant challenges. Local government response has been focused on initiatives to increase housing supply, but the impact of these policies has yet to be fully realized.
The market timing implications for current transactions are significant. The rapid price appreciation suggests that buyers who act sooner may benefit, while sellers are in a strong position to achieve favorable outcomes. Based on current indicators, the expected price trajectory for the remainder of the year is likely to continue upward, although perhaps not at the same dramatic rate seen in June. Stay informed on Lisbon property market developments at realestate-lisbon.com.
