Real estate shortage in Portugal raises housing prices by 10%

Portugal continues to be an attractive country for living and investing, despite the uncertain economic and political context. However, the shortage of housing for sale is a structural problem with no end in sight, as new construction does not meet the demand in the country. This is where the housing crisis in Portugal lies: even with a 25% decrease in housing sales in 2023, prices have risen by more than 10%, reflecting the lack of real estate, according to a study by the real estate agency of billionaire Warren Buffett.

Although the prospects for the real estate market in Portugal in 2024 are quite good

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the truth is that home sales in Portugal have fallen by about 25%, shows the 2024 Real Estate Report by Berkshire Hathaway HomeServices, a real estate agency owned by Buffett. This decline in home transactions in Portugal reflects the lower demand for homes in the country, which has failed to bring down home values,even in the more expensive segment of the market.

In 2023, "prices increased by more than 10% compared to 2022, raising the average price per square meter to 4,800 euros, reaching peaks of up to 10,000 euros in some areas," emphasizes CEO of Berkshire Hathaway HomeServices Atlantic Portugal, Cesar Santos, as stated in a release. This is primarily due to a structural shortage of housing supply for sale in Portugal.

The real estate market in Lisbon

It is highlighted in the report as "attractive, but characterized by a huge challenge: a significant shortage of properties." In the capital alone, there is a shortage of about 300,000 properties, and the pace of construction is not keeping up with demand, leading to a "significant increase in prices." This entire scenario, linked to the current political and economic instability in the country, "has led to a significant decrease in real estate sales in 2023," the document concludes.

Foreigners help Portugal look ahead to 2024 with optimism

Despite global uncertainties, Michael Vincent, CEO and President of Berkshire Hathaway HomeServices Portugal Property, looks confidently at the Portuguese market: "Portugal remains a benchmark destination. We are well-prepared to tackle challenges and seize opportunities in 2024.

Foreigners want to spend their retirement in Portugal," he says.

Therefore, the growing interest of foreigners, including digital nomads, is one of the reasons why experts view the real estate market in Portugal with optimism - despite the end of the "golden visas" and the regime for non-habitual residents a few months ago. According to a report, there are currently over 700,000 foreigners living in Portugal who value factors such as the climate, low crime rate, and the beauty of the Portuguese coastline. They primarily prefer to buy homes near Lisbon and Cascais.

What should be noted is that Americans are the most prominent foreign buyers. "In 2023, 40% of foreign buyers came from the USA, particularly from New York and California, followed by buyers from France and the UK. Many of these buyers plan to rent out their homes and are therefore looking for properties in excellent condition," the document states.