Portugal’s property market remains a top choice for international buyers, driven by a mix of lifestyle appeal, foreign investment, and relatively affordable prices.
By the end of 2025, it’s expected to outpace property markets in the UK, EU, and US, continuing its strong upward momentum.
From dynamic cities like Lisbon and Porto to sought-after coastal areas such as the Algarve and Comporta, Portugal’s real estate sector is proving both resilient and forward-thinking.
In this article, we’ll take a look at what’s shaping the market right now and what to expect next.
You’ll also learn more about:
- Why demand remains high in Portugal
- Current performance and hotspots
- The government’s housing and foreign investment reforms
- Portugal real estate market forecast
- Real estate zoning and regulation constraints
- What should investors watch for?
Portugal Real Estate Market Analysis: Why Demand Remains High
In early 2025, Portugal’s property market saw prices jump by 15.8 percent compared to the same time last year, well above the EU average of 4.5 percent and the UK’s 2.9 percent.
A mix of geopolitical shifts, international investment, and Portugal’s strong lifestyle appeal have all contributed to pushing demand.
Data from the Portuguese Trade & Investment Agency (AICEP) shows that foreign direct investment hit €13.2 billion, with €3.5 billion of that going straight into real estate.
During that period, foreign buyers made up 81 percent of property investments.
But this isn’t just short-term speculation. Foreign residents now make up about 12 percent of the population, and the number of US citizens living in Portugal has increased sevenfold since 2017.
Portugal Housing Market 2025: Current Performance and Hotspots
According to our partner Goldcrest Portugal Real Estate, the first quarter of 2025 reinforced Portugal’s strong housing market start, with residential (long and short term rentals) and commercial segments both seeing double-digit growth.
Urban areas with high livability, Portuguese international schools, natural beauty, and luxury infrastructure continue to dominate investment interest.
Government’s Housing, Tax, and Foreign Investment Reforms
In response to rising housing prices, shortages, and concerns about gentrification, both the central government and local municipalities have introduced or proposed several reforms affecting the real estate market in 2024 and 2025.
In cities like Lisbon and Porto, new local housing initiatives are addressing the saturation of short-term rentals.
Licenses for short-term rentals, such as those for Airbnb properties, have been suspended or heavily restricted in historic districts and central areas.
On a national level, Portugal officially ended the real estate pathway in addition to several other
Portugal Golden Visa changes in 2023, ceasing new applications linked to residential property purchases in high-density urban and coastal areas.
Additionally, the government has proposed taxing vacant homes and implementing a more progressive structure for the Municipal Property Tax (IMI) to combat speculative ownership in urban areas.
These ongoing discussions could significantly influence real estate investment dynamics beyond 2025.
Portugal Property Market Forecast: 2025 and Beyond
Portugal’s property market is expected to keep growing through 2025, thanks to solid economic conditions, steady foreign demand, and a strong recovery in commercial real estate.
Residential Market: What to Expect
Good news for buyers and investors as Portugal continues to attract international attention. According to a 2024 Ernst & Young survey:
- 84 percent of foreign investors plan to expand or set up operations in Portugal by 2025
- 77 percent believe Portugal’s appeal will grow even more over the next three years, which is well above the Eurozone average of 67 percent.
2025 is shaping up to be a strong year in terms of sales volume and property prices. As the market matures, things may level out slightly by 2026, but the outlook remains positive.
Commercial market: strong momentum
Commercial real estate had a big start to the year, with investment up 151 percent in Q1 2025 compared to the same time last year. Total investment hit €651 million, with these sectors leading the way:
– Retail: €385.5 million (59 percent)
– Hospitality: €155.7 million (24 percent)
– Offices: €88 million (13 percent)
– Logistics: €24 million (4 percent)
Portugal tourism is projected to grow 9 percent in 2025, which means demand for hospitality spaces, especially in Lisbon, Porto, and rising destinations, will stay strong.
Meanwhile, office and logistics spaces are also gaining interest, particularly in northern Portugal, where developers are eyeing future growth.
Real Estate Zoning and Regulation Constraints
However, Portugal’s real estate boom is increasingly encountering structural limits on new housing supply.
In urban centers like Lisbon and Porto, the pipeline for residential development is hindered by zoning delays, strict heritage preservation laws, and a complex array of municipal permitting rules that complicate large-scale projects.
Lisbon’s Câmara Municipal (City Hall) has prioritized urban rehabilitation over new construction, offering tax incentives for restoring existing buildings while imposing limits on high-rise or high-density developments.
Although this approach supports architectural conservation, it also reduces the number of new housing units entering the market, particularly in neighborhoods with high investor interest.
Coastal and protected areas, such as Comporta and parts of the Algarve, face additional restrictions due to environmental zoning laws. These regulations limit land use and building density, creating scarcity in the very areas that attract foreign buyers.
Nationwide, new builds tend to focus either on ultra-luxury markets or subsidized affordable housing, with limited options for middle-income buyers. Construction costs have remained high since 2022 due to labor shortages and material inflation, further deterring speculative development.
While demand for housing remains strong, Portugal’s ability to increase housing inventory in high-demand areas is structurally limited, leading to continued upward pressure on prices as we move into 2026.
Market Predictions: What Investors Should Watch
Its performance is notable not only in Europe but also globally.
Here are some aspects that property buyers should watch for in the coming months:
Sustained international demand: Geopolitical uncertainty and Portugal’s image as a haven will continue driving demand from Americans, Brits, and Northern Europeans.
Commercial growth in secondary cities: Expect more investment flowing into secondary cities like Braga, Coimbra, and Évora, driven by improved infrastructure and economic diversification.
Express sales and low inventory: Portugal’s top properties are being sold quickly. In some districts like Faro, 46 percent of listings are sold within one week. The lack of supply in high-demand areas could further accelerate price increases.
Whether you are considering purchasing a residential property, launching a business through the Portugal D2 Visa, or expanding your investment portfolio, the indicators show that Portugal is a secure and promising choice in an increasingly uncertain world.
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