Portugal's Housing Market Shatters All Records in 2025 With 41.2 Billion Euros in Sales, Even as Foreign Buyers Pull Back

Portugal's housing market broke every record in the book last year. According to figures released by INE (Statistics Portugal) on Monday, residential property transactions reached a staggering 41.2 billion euros in 2025 — a 21.7 percent jump from 2024 and the highest figure ever recorded.

But buried in the headline-grabbing numbers is a quieter trend that matters more to anyone planning to buy from abroad: foreign buyers are retreating.

The Numbers Tell Two Stories

The top-line data is unambiguous. More homes were sold in Portugal in 2025 than in any previous year, with existing properties accounting for 30.5 billion euros (up 25 percent) and new builds for 10.7 billion euros. House prices accelerated to 17.7 percent year-on-year in the third quarter alone, with existing dwellings rising 19.1 percent and new properties climbing 14.1 percent.

In the third quarter, 42,481 homes changed hands for a combined 10.5 billion euros. Households accounted for 88.3 percent of transactions by volume and 87.5 percent by value, confirming that the market is overwhelmingly driven by domestic demand — not speculative foreign capital, as is sometimes assumed.

Foreign Buyers in Retreat

Buyers with a tax residence outside Portugal purchased just 2,219 dwellings in the third quarter of 2025, a year-on-year decline of 16.4 percent. Within that group, EU-domiciled buyers made only 1,149 transactions, down 16.5 percent.

This is not a blip. Foreign buyer activity has been declining since the Golden Visa programme was restructured in late 2023, removing residential real estate as an eligible investment. Combined with higher interest rates through most of 2024, tighter visa requirements, and the strengthening of the US dollar (which makes euro-denominated property more expensive for American buyers), the pullback is structural.

For context, foreign buyers accounted for roughly 12 percent of all transactions at their peak in 2019. By late 2025, that share has dropped below 6 percent — and falling.

What Is Driving Domestic Demand?

Several factors explain why Portuguese buyers are compensating for the foreign retreat. Real wages grew faster than inflation for the first time in years, mortgage rates have come down from their 2023 peaks following ECB rate cuts, and the government's housing stimulus measures — including the return of tax exemptions for young buyers — have shifted purchase timing forward.

There is also the simple arithmetic of chronic undersupply. Portugal has been building fewer homes than it needs for over a decade. INE data from mid-2025 shows 13,244 new dwellings completed in the first half of the year, a 4.9 percent increase but still far below the estimated annual need of 40,000 to 50,000 units cited by industry bodies. When supply is structurally constrained, prices keep rising regardless of foreign demand.

What This Means for Expats

For prospective foreign buyers, the data sends a mixed signal. The retreat of other international buyers means less competition at viewings, slightly more negotiating power, and a market less prone to bidding wars — particularly for properties outside Lisbon and the Algarve.

But prices are not coming down. The 17.7 percent annual increase is the highest since INE began tracking the index, and there is nothing in the current data to suggest a correction. Expats looking to buy in Portugal should understand that the market is now overwhelmingly local, the price floor is set by domestic demand, and waiting for a dip may mean watching prices climb further.

Those arriving on a digital nomad visa or planning to purchase property should factor in that Portugal's housing market is no longer the bargain it was five years ago. The median price per square metre in Lisbon now exceeds 4,000 euros, and in popular secondary cities like Porto, Braga, and Faro, prices have doubled since 2019.

The housing crisis that brought thousands to the streets earlier this month has not cooled the market. If anything, the political attention has accelerated policy changes that benefit existing buyers — while doing little to fix the supply side.