House Prices in Portugal Accelerated Through 2025, Hitting 18.9 Percent Growth in the Final Quarter

New data from Portugal's National Statistics Institute (INE) confirms what anyone searching for a home already knows: 2025 was the most expensive year on record to buy property in Portugal, and the trend was still accelerating when the year ended.

The Housing Price Index (IPHab) rose 17.6 percent over the full year of 2025, the steepest increase in the series that dates back to 2009. That figure was 8.5 percentage points higher than in 2024, marking a sharp acceleration that few analysts had predicted at the start of the year.

The Q4 acceleration is the real story

While the annual figure is striking, the quarterly breakdown tells a more revealing story. Between October and December 2025, house prices grew 18.9 percent year-on-year — the most intense quarterly increase on record, and the seventh consecutive quarter of accelerating price growth. On a quarter-on-quarter basis, prices rose a further 4 percent, suggesting the market was still gaining momentum as 2025 drew to a close.

Existing homes drove much of the surge, with prices climbing 20.9 percent in the fourth quarter alone. New builds, while still appreciating rapidly at 13.7 percent, lagged significantly behind the resale market.

More homes sold, even as prices soared

In a market where prices are rising this fast, one might expect transaction volumes to slow. Instead, 2025 set a new record: 169,812 homes were sold, an 8.6 percent increase over 2024, for a combined value of 41.2 billion euros. The Portugal Brief reported on the sales record when the transaction data was first released, but the price index data published yesterday adds a crucial dimension: the market is not just bigger, it is becoming significantly more expensive to enter.

There was, however, a notable shift in the final quarter. Transaction volumes actually fell 4.7 percent year-on-year between October and December — the first contraction since early 2024. Whether that represents the beginning of a cooling-off or a seasonal blip remains to be seen.

Foreign buyers continue to retreat

For the third consecutive year, buyers with fiscal residence outside Portugal reduced their activity in the market. Just 8,471 homes were purchased by non-residents in 2025, a drop of 13.3 percent, for a total value of 3.4 billion euros. The trend predates the end of the Golden Visa programme and likely reflects a combination of factors: tighter regulations, higher prices, and the comparative attractiveness of other Southern European markets.

Portuguese families, by contrast, dominated. They accounted for 87.5 percent of all transactions — the highest share since 2019 — purchasing 148,632 homes worth 35.7 billion euros. The data challenges the narrative that Portugal's housing crisis is driven primarily by foreign demand; domestic buyers are increasingly the market's engine, fuelled in part by falling mortgage rates and pent-up demand.

What it means for affordability

The average transaction price exceeded 250,000 euros in 2025. For context, the median gross annual salary in Portugal was approximately 15,600 euros in 2024. That price-to-income ratio places homeownership firmly out of reach for a large portion of the population without significant savings, family support, or dual incomes.

Recent protests across 16 Portuguese cities have made the political pressure visible. And while rental prices have shown signs of easing, the purchase market tells a different story entirely.

Regional patterns

Every region on the mainland saw transaction growth in 2025, led by the Alentejo (up 12.7 percent) and the Oeste e Vale do Tejo (up 12 percent). Greater Lisbon still commands the largest share of total value at 30.1 percent, but its relative weight actually fell by 2.1 percentage points — a sign that demand is gradually dispersing to more affordable areas. Madeira was the only region to see both volume and value decline.

For anyone navigating Portugal's housing market — whether as a first-time buyer, a recent arrival, or a long-term renter weighing a purchase — the INE data offers a blunt summary: prices are not just rising, they are rising faster. And until supply catches up with demand, that trajectory is unlikely to change.