The growth of prices and rent for housing is two times higher than in Europe.

The residential real estate market continues to show signs of vitality. In the first quarter of this year, while property prices in the Eurozone decreased by 0.9% compared to the last quarter of 2022, in Portugal they increased by an average of 1.4%. According to data published by Eurostat on Wednesday, Portugal became the sixth country in the Eurozone to experience the highest increase in housing prices from January to March.

“We continue to deal with a chronic shortage of housing for sale, now further exacerbated by rising construction costs,” noted Ricardo Guimarães, director of Confidencial Imobiliário, in May in response to the results of the Portuguese Housing Market Survey (PHMS), which indicated that developers and realtors expect the market to not experience a decline in prices in the next 12 months. At the same time, Luxembourg and Germany experienced a decrease in housing prices in the first quarter of 2023 by 4.5% and 3.1% respectively, leading a group of eight eurozone countries where housing prices fell in the first quarter of this year.

The high activity in the residential real estate market in Portugal compared to the Eurozone is not a new or short-term trend. For example, Eurostat data shows that in the last 12 months ending in March, while property prices in Portugal increased by an average of 8.7%, the Eurozone saw a slight increase (0.4%). The same trend was observed in 2022 (Portugal: 11.3% compared to the Eurozone: 3%), as well as over the last two and five years, when prices in Portugal grew twice as fast as the average in Eurozone countries. For instance, over the last five years, while property prices in Portugal increased by an average of 10.2% per year, leading to a total growth of 58%, in the Eurozone prices grew by an average of 5.1% per year, resulting in a total growth of 28%.

Rental prices are following real estate prices. The dynamism of the national real estate market is not limited to buying and selling operations. It also extends to the rental market.

Despite the fact that both rental prices and real estate prices in Portugal are rising faster than the average in the Eurozone, since 2018, the real estate sales market has shown much greater strength than the rental market. According to Eurostat data, over the past five years, the selling price of real estate in Portugal has increased twice as fast as rental prices. Although this may seem like a high figure, especially considering that only five countries in the Eurozone have a higher rate, this value is very close to the average in the Eurozone (3.5 times). This trend even shifted slightly in the first quarter, when rental prices rose by 1.6%, which is slightly more than real estate prices (1.4%). "The rental market continues to show stable demand, which, combined with a lack of supply, puts pressure on rental prices," states the latest PHMS report compiled by Confidencial Imobiliário.