New Housing Construction Costs in Portugal Increased 3.9% in June
The National Statistics Institute (INE) has announced that the New Housing Construction Cost Index (ICCHN) in Portugal registered a year-over-year increase of 3.9% in June, a slight acceleration from the 3.6% recorded in the previous month. This statistical announcement, based on the institute's monthly survey of construction companies, provides a key indicator of inflationary pressures within the real estate development sector. The methodology used for this analysis involves tracking the price evolution of a representative basket of materials and labor costs associated with residential construction. The specific numerical findings show that the overall index was primarily driven by a significant surge in the labor component, which rose by 7.3% compared to June of the previous year. The materials component saw a much more subdued increase of 1.0%. The geographic breakdown indicates this is a national trend, affecting construction projects across all regions, including the key markets of Lisbon and the Algarve. In a time period comparison, the 3.9% annual increase in June is 0.3 percentage points higher than the rate observed in May 2025, suggesting that cost pressures are intensifying. A market segment analysis reveals that the most significant price hikes in materials were seen in glass and mirrors, which increased by approximately 30%, and HVAC systems, which rose by about 10%. Conversely, prices for asphalt, wood products, and certain steel and iron piping decreased by around 10%. An industry expert from a leading construction firm commented that, “The persistent rise in labor costs reflects a tight market for skilled workers and remains the single biggest challenge for developers aiming to control project budgets.” The government has acknowledged the rising costs as a potential impediment to its housing goals, but no new specific regulatory response to this data has been announced. In a historical context, while the current rate of increase is below the peaks seen in previous years, the steady climb in labor expenses continues to be a defining trend of the post-pandemic construction market. The INE will continue its monthly data collection, with the next report for July's figures expected in early September. Stay informed on Lisbon property market developments at realestate-lisbon.com.
