Portuguese Housing Market 2025: High Prices and New Measures

Portugal’s housing market in 2025 sees high prices persist, with new incentives for young buyers but limited supply.

Buying a home in Portugal remains a challenge in 2025, with prices staying high and supply failing to keep up with demand, despite new government measures to encourage purchases by younger buyers. From Lisbon to the countryside, the real estate market reflects a nation split between urban pressure and rural stagnation – but could change be on the horizon?

Prices Hold Steady

Recent data from the National Statistics Institute (INE), updated through the end of 2024, show that the median cost of homes sold in Portugal reached €1,709 per square meter in the 12 months ending in September. In Lisbon, that figure soars to €3,500/m², while in Porto it hovers around €2,800/m². Yet in rural areas like Pampilhosa da Serra, homes can be found for as little as €300/m² – a gap that highlights the concentration of demand along the coast.

Analysts warn that prices are unlikely to drop significantly this year. “Lower interest rates and incentives like IMT exemptions for young people are heating up demand, but new housing construction isn’t keeping pace,” says Mariana Arrochella Lobo, CEO of ARC Homes Portugal, in a recent interview. In 2024, prices rose by 10.4%, and the trend seems set to continue, albeit at a slower pace.

Government Measures Under Scrutiny

The Democratic Alliance (AD) government, in power since April 2024, has rolled out measures to ease home buying, particularly for those under 35. The exemption from the Municipal Property Transfer Tax (IMT) and Stamp Duty (IS) for first-time buyers took effect last year, with a public guarantee for housing loans expected soon. “These initiatives may help, but without more supply, prices will keep climbing,” cautions Carlos Balado of OBS Business School.

Under the Build Portugal program, the government is betting on public housing and tax incentives for renovations. Yet bureaucracy and slow licensing processes continue to hinder progress. In 2023, the state spent only €303 million of the €500 million budgeted for housing, according to Observador, raising doubts about the effectiveness of these policies.

Who’s Buying and Where?

Portuguese buyers still dominate, accounting for 93.6% of transactions in 2022, per INE data. However, foreigners are gaining ground, especially in the Algarve (36.9% of their purchases) and Lisbon, drawn by prices that, while steep for locals, remain competitive compared to other European capitals. In 2024, 18% of new housing loans went to non-residents, reports the Bank of Portugal.

Meanwhile, the interior offers bargains. In 83% of Portuguese municipalities, a 100 m² home costs less than €170,000, and in 12 councils, it’s possible to buy for under €30,000, according to idealista. “The issue is most people want to live in cities where supply is scarce,” notes Hugo Santos Ferreira of APPII.

A Surprising Detail

Did you know that renovated homes in Portugal can fetch up to 30% more at sale? A study by A. Machado Açores, released in March 2025, shows that investing in upgrades is a growing trend, especially in urban areas where demand for move-in-ready properties is surging.

What’s Next?

For 2025, experts predict price stability in major cities, with slight increases possible due to buying incentives. In rural areas, stagnation is likely to persist unless efforts to attract residents succeed. “Without building more and faster, the dream of homeownership will slip further away,” concludes Gonçalo Nascimento Rodrigues, a real estate consultant.