Portugal's Youth Secure 59% of New Housing Credit, Driven by State Incentives
A new statistical report from the Bank of Portugal (BdP) has confirmed a major demographic shift in the nation's property market, revealing that individuals aged 35 and under were responsible for 59% of the new credit for permanent housing acquisition between January and August 2025. This surge is directly linked to a series of government incentives designed to facilitate homeownership for younger buyers.
The data, released on Wednesday, is based on an analysis of all new mortgage contracts registered in the country. The BdP report highlights that of the €12 billion in total new housing credit issued in the first eight months of the year, a staggering €7.1 billion was contracted by the younger demographic. This figure is more than double the €3.5 billion secured by the same age group during the equivalent period in 2024.
According to the central bank's analysis, the primary drivers for this growth are recent fiscal measures, including a full exemption from the Imposto Municipal sobre Transmissões Onerosas de Imóveis (IMT) and the Imposto de Selo (stamp duty) for first-time buyers under 35. Furthermore, a public guarantee scheme implemented in 2025, which allows banks to finance up to 100% of the property value, has significantly lowered the barrier to entry for those with limited savings.
The statistical findings show a clear progression. Between January 2022 and July 2024, prior to the incentives, young buyers accounted for 44% of new contracts. This share rose to 53% following the introduction of the tax exemptions in August 2024 and has now consolidated at 59% with the public guarantee in full effect. In contrast, borrowers over the age of 35 contracted €4.9 billion in new loans, a modest increase of just €200 million compared to the first eight months of 2024.
The average loan amount for young buyers has seen a dramatic increase of 43%, rising from €134,700 in December 2023 to €192,600 by August 2025. For borrowers over 35, the average loan amount increased by a more moderate 25% over the same period. This has occurred alongside a general downward trend in borrowing costs, with the average interest rate on new housing loans falling for the seventh consecutive month to 2.86% in August.
The report also provides a breakdown by property value. The average price of a home purchased by a young buyer with a mortgage rose 8% in the first eight months of 2025, reaching €235,700. This remains significantly lower than the average price for properties bought by those over 35, which stood at €275,400 in August. This price differential of €39,800 has widened compared to 2024.
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A key insight from the data is the difference in financing structure between the two groups. The average loan for a young buyer now covers 82% of the property's purchase price, a clear indicator of lower initial capital. For older buyers, this loan-to-value ratio is substantially lower at 58%. Economists are pointing to this as evidence that the government's policies are successfully targeting individuals who previously faced significant financial barriers to entry.
In a statement, a senior economist from a leading Portuguese bank, who wished to remain anonymous, commented, “The data unequivocally demonstrates the direct impact of the fiscal and financial support measures. We are observing a structural change in market composition. While this stimulates demand, it will be crucial to monitor the corresponding impact on housing supply and prices in key urban centers like Lisbon and Porto.”
The Bank of Portugal's report notes that while August saw a monthly contraction in new credit, a common occurrence during the summer holiday period, the year-over-year growth trend remains exceptionally strong. The central bank will continue to monitor these developments as part of its mandate to ensure financial stability.
The government has stated that these measures are part of its broader strategy to address the housing crisis and ensure that younger generations are not locked out of the property market. The full impact of these policies on market dynamics and affordability will be a key area of analysis in the coming months.
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