Southern Portugal Property Prices Surge: Average Home Hits €450,000 Amid 22% Annual Growth
A new statistical analysis from property portal Imovirtual has revealed a significant acceleration in property prices across the southern region of Portugal, with the average sale price reaching €450,000 in August 2025. The report, which compares data month-over-month and year-over-year, confirms a 22% annual increase in the region, underscoring sustained and intense demand in both coastal and interior markets.
The data was compiled by tracking asking prices on the Imovirtual platform, providing a comprehensive snapshot of the current market landscape. The methodology involved comparing thousands of listings from August 2025 against those from July 2025 and August 2024 to determine growth trajectories. The findings indicate that the southern region, a magnet for tourism and foreign investment, is outpacing the national average property price appreciation, which stood at 15% annually.
Numerically, the average sale price for a property in Portugal as a whole climbed to €426,000. However, the South’s average of €450,000 highlights its premium status. The district of Faro, which includes the highly sought-after Algarve coast, continues to be the most expensive, with an average asking price of €550,000, itself a 22% year-over-year increase. The district of Setúbal also posted strong figures, with prices averaging €450,000, a 15% annual rise.
The geographic breakdown reveals that appreciation is not confined to the prime coastal areas. The Alentejo district of Beja recorded the most dramatic homologous growth, with prices soaring by 32% to reach an average of €197,000. Évora saw an 18% annual increase to €264,500, while Portalegre’s prices rose by 19% to €125,000, indicating a broadening of investor and buyer interest into Portugal’s interior.
The rental market has experienced parallel growth. The average rent in the South increased by 12% annually to €1,080. Faro leads the rental market at €1,300 per month, an 18% year-over-year jump. The most significant rental inflation was observed in Portalegre, where average rents surged by an astonishing 40% compared to the previous year, now standing at €700. This sharp increase in a less-developed region points to a severe supply-demand imbalance.
Analysis of market segments suggests that demand is robust across the board, from luxury villas in the Algarve to more affordable housing options in the Alentejo. The persistent demand from international buyers, combined with a steady domestic market, continues to put upward pressure on a housing stock that has been slow to expand.
Industry experts view these statistics as a sign of a resilient market, but also one that presents affordability challenges. A senior economist from a major Portuguese bank commented, “The 22% annual growth in the South is remarkable. It reflects strong fundamentals, including tourism and foreign investment, but also highlights the urgent need for an increase in housing supply to ensure market stability and accessibility for local populations.”
Government bodies are reportedly monitoring the situation closely. A spokesperson for the Ministry of Housing noted that while the market’s dynamism is positive for the economy, the government is exploring measures to accelerate construction and promote more affordable housing projects, particularly in high-pressure zones like the Algarve and the Lisbon metropolitan area, which includes Setúbal.
Historically, the Portuguese property market has seen cycles of rapid growth, but the current trend is notable for its intensity and geographic breadth. Compared to the pre-pandemic years, the rate of appreciation has accelerated significantly, driven by new lifestyle trends such as remote work and a heightened interest in regions offering more space and a better quality of life.
Imovirtual is expected to release its next quarterly report in early December, which will provide further insights into whether this strong growth trajectory will be sustained through the end of the year. Market watchers will be paying close attention to see if the trend of rising interest in interior regions continues to gather pace.
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