Portugal's House Prices Rose 17.6% in 2025 — The Biggest Annual Increase on Record

Portugal's property market delivered its most dramatic performance on record in 2025, with house prices rising 17.6% across the country — the steepest annual increase since the Instituto Nacional de Estatística (INE) began tracking residential prices in 2009. The data paints a picture of a market with no ceiling in sight, even as affordability alarm bells grow louder in Brussels.

A Market Breaking Every Record

A total of 169,812 homes changed hands in 2025, itself an all-time high, generating €41.2 billion in transaction value — up 21.7% on 2024. Lisbon's benchmark crossed €5,000 per square metre for the first time in history, a threshold that would have seemed implausible a decade ago when the country was still clawing back from its sovereign debt crisis.

The surge was broadly based. Even secondary cities and regional markets saw double-digit gains as buyers, both domestic and international, competed for a supply that has consistently failed to keep pace with demand.

Foreign Buyers: Still Significant, Slightly Less Dominant

International buyers purchased 41,086 homes in 2025 — up 6.6% year-on-year — representing 27.6% of all family-segment purchases. That is roughly one in four homes, making foreigners a structural fixture of the Portuguese property market rather than a cyclical phenomenon. However, their share has eased from its recent peak, the lowest proportion since 2021, as higher prices and changing visa incentive structures have modestly tempered demand from some buyer profiles.

The price premium foreign buyers pay remains stark. Buyers with a tax domicile abroad paid an average of €470,277 per transaction — more than double the Portuguese buyer average of €234,120. British nationals averaged €512,585 per purchase; American buyers paid €479,403.

The most notable shift within the foreign buyer pool is the rapid rise of Brazilian purchasers. Brazilians now account for 23.9% of all foreign property acquisitions in Portugal, with 9,808 transactions completed in 2025 — up 27.5% on the prior year. Their growing footprint extends into mortgage financing: Brazilians represent 44% of all foreign mortgage borrowers, and foreign nationals overall now account for 13.56% of total mortgage lending by value (€2.6 billion), up from 7.38% in 2021.

A Warning from Brussels

The headline numbers come with a significant caveat. The European Commission has assessed Portuguese residential property as overvalued by approximately 35% relative to income and rent fundamentals — one of the more severe overvaluation readings among EU member states. Portugal also ranked second in the entire EU for house price growth in the third quarter of 2025, behind only Hungary.

Those figures are relevant for buyers approaching the market as an investment. While rental yields in Lisbon and Porto have historically provided adequate returns, compressed cap rates and the prospect of EU-level regulatory action on short-term rentals add complexity to the calculus.

What This Means for Buyers in 2026

For expats considering a purchase, the data offers little comfort in terms of entry price but does confirm that the market remains liquid. Transaction volumes at record highs suggest sellers can execute, and foreign-language conveyancing pipelines at Portuguese notarial offices are well-established.

Mortgage rates remain elevated relative to the pre-2022 era given Euribor levels, but Portuguese banks have continued to extend credit to foreign residents, particularly those with verifiable income in hard currencies. The doubling of foreign nationals' share of mortgage lending since 2021 reflects both demand and availability.

Whether 2026 brings another record year depends heavily on two factors: the trajectory of the Middle East energy crisis and its effect on Eurozone interest rate policy, and the political appetite in Lisbon and Brussels to intervene more forcefully on the supply side. Neither looks likely to resolve quickly.

Sources: Instituto Nacional de Estatística (INE), ECO (eco.sapo.pt), Observador, Público.