Portugal's Housing Market Faces Record 16% Price Surge Amidst 723,000 Vacant Properties
Portugal's real estate market is currently defined by a stark contradiction, as official data reveals a record-breaking increase in property prices while hundreds of thousands of homes remain unoccupied across the country. In the first quarter of 2025, house prices experienced a dramatic jump of over 16%, a new high that continues to fuel the ongoing national housing crisis. This surge has been mirrored in the rental sector, which saw a significant 10% price increase, further straining the finances of tenants.
The core of the issue is highlighted by a startling figure: an estimated 723,000 houses in Portugal are currently empty. This vast number of vacant properties, ranging from rural mansions entangled in inheritance issues to modern apartments held for speculative purposes, creates a distorted market. While there is a clear and pressing demand for housing, a substantial portion of the country's housing stock remains off-market, contributing to an artificial scarcity that drives up prices for available properties.
This situation has not gone unnoticed at the European level. The European Commission has formally recommended that the Portuguese government consider implementing measures to stabilize the market. Among the suggestions are the introduction of rent controls in high-pressure zones and the imposition of stricter limits on short-term rentals, known as Alojamento Local (AL), which have been blamed for removing a significant number of properties from the long-term rental market, especially in cities like Lisbon and Porto.
However, the response from the Portuguese government has been cautious, with a prevailing sentiment to resist what could be perceived as an overreach by Brussels into domestic affairs. The national debate on housing policy remains contentious. During the recent election cycle, some political figures, such as Rui Rocha of the Liberal Initiative, championed a supply-side solution, encapsulated by the slogan "build, build, build." Critics, however, argue that simply increasing construction will not address the affordability gap if new developments continue to target the high-end market and fail to meet the needs of the average Portuguese family, whose wages are not keeping pace with the soaring cost of living.
The social consequences of this trend are becoming increasingly visible. The traditional aspiration for young people to leave their parental homes is now replaced by a struggle to even enter the housing market. The high cost of housing is pushing residents to consider living in more remote or unconventional settings, with some commentators noting that nature may become the only affordable housing option for a generation priced out of the cities and towns.
The phenomenon of large, empty houses, particularly in rural areas, symbolizes a market inefficiency that has deep historical and legal roots, including complex property laws and inheritance processes that can leave properties in legal limbo for years. For now, the market continues on a path of record-high prices and significant vacancy rates, a paradox that presents a formidable challenge for policymakers and citizens alike.
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