Portuguese House Prices Decelerate for the First Time in Nearly Two Years as First-Quarter Sales Drop 8.7%

House-price growth in Portugal slowed in the first quarter of 2026 for the first time in almost two years, according to figures from the national statistics office — a faint sign of cooling in a market that has run hot for a decade, even as prices kept climbing and buyers grew scarcer.

The Instituto Nacional de Estatística (National Statistics Institute, or INE) reported that its house-price index rose 17.8 percent in the first quarter compared with the same period a year earlier. That is still a steep increase by any normal measure, but it is 1.1 percentage points below the 18.9 percent recorded in the final quarter of 2025 — and the first deceleration since the second quarter of 2024.

The slowdown was not enough to make homes any cheaper. Measured against the previous quarter, prices actually rose a further 3.8 percent. The pressure remained concentrated in the existing-homes segment, where prices climbed 19.7 percent year on year, well ahead of the 12.6 percent rise for newly built dwellings.

The clearer shift came in the number of transactions. Between January and March, 37,745 homes changed hands across the country, down 8.7 percent from the same period of 2025 and the second consecutive quarterly fall in sales. Existing dwellings accounted for the bulk of the market — 30,356 sales, or 80.4 percent of the total — but those transactions were down 8.0 percent, while sales of new homes dropped a sharper 11.6 percent.

Yet the total value of the homes sold still rose. INE put the combined worth of first-quarter transactions at roughly €9 billion, up 3.2 percent year on year — a reminder that prices have climbed so far that fewer sales can still add up to more money. In effect, Portugal is trading a smaller number of increasingly expensive properties.

For residents and would-be buyers, the data captures the bind the market has become. Affordability has been stretched by years of double-digit price growth that has consistently outpaced wages, pushing ownership out of reach for many younger and middle-income households and feeding intense demand for rental homes. A modest easing in the rate of increase offers little immediate relief when the underlying level remains near record highs.

Several forces have driven the long boom: strong foreign demand, including from international buyers and remote workers; a chronic shortage of new construction; and, until recently, low borrowing costs. Whether the first-quarter softening marks the start of a genuine turn or merely a pause will depend on how interest rates, incomes and the pace of building evolve over the rest of the year.

Housing has become one of the most politically charged issues in the country, with successive governments and opposition parties trading proposals on construction, rent support and tax incentives. The latest numbers are unlikely to cool that debate — but they do suggest that, after years of relentless acceleration, the market may at last be losing a little momentum.