Portugal housing market seen cooling, not reversing

Portugal’s housing market is showing signs of cooling after several quarters of sharp gains, but developers, brokers and market analysts told ECO that they do not expect a sudden drop in prices — a key signal for investors, builders and households tracking affordability and demand in the country.

Data released by statistics office INE showed house prices rose 16.5% year on year in the second quarter, down from 17.8% in the previous quarter and the lowest reading since the start of 2025. Prices still increased 3.6% from the first quarter. At the same time, home sales fell 6.4% from a year earlier to 40,142 transactions, while the total value traded rose 4.2% to €10.7 billion.

Industry executives said the combination of fewer sales and higher traded value points to a market adjusting through volumes rather than prices. Manuel Maria Gonçalves, chief executive of property developers’ association APPII, said this was “a slowdown in the intensity of growth, not a reversal of the trend”. Carlos Santos, chief executive of brokerage Zome, also pointed to limited supply, while Century 21 Portugal said buyers have become more selective and more cautious about affordability.

According to the INE data, families accounted for 87% of home purchases in the quarter, buying 34,935 homes, while buyers with tax residence outside Portugal bought 1,890 properties, or 4.7% of the total. Market participants said the pressure is particularly visible in the second-hand segment, where supply remains insufficient and new housing is slow to reach the market.

Looking ahead, the sector expects price growth to moderate further rather than stop abruptly. Ricardo Guimarães, director of Confidencial Imobiliário, told ECO the market is likely to move towards lower rates of appreciation, closer to those already seen in Lisbon, while BPI’s research team said quarterly price increases should continue to ease to below 3% in coming quarters.

Originally published at Eco.pt