House prices in Portugal continue to rise: what explains this increase?

The real estate market in the European Union is going through a new phase of appreciation, with Portugal standing out as one of the countries where house prices rose the most in the second quarter of 2024. This growth puts the country in second place on the list of member states with the highest increases, in a scenario that is being driven by factors such as falling interest rates on mortgage loans and slowing inflation. In this article, we analyze what lies behind this price upturn and what the implications are for those looking to invest.

Portugal in 2nd place for house price rises
In the second quarter of 2024, house prices for sale rose by 3.9% in Portugal, only surpassed by Croatia, which recorded a rise of 4.3%. This significant increase is reflected in the recovery of the real estate market, which remained stable during the first few months of the year. According to Eurostat, the eurozone saw house prices rise by 1.8%, while in the European Union as a whole, the increase was 1.9%.

The appreciation of real estate in Portugal is linked to the reduction in interest rates on mortgage loans - which makes loans more accessible - and the stabilization of inflation - which gives families back purchasing power. These factors, combined with a limited supply of properties in sought-after areas, have sustained the sector's growth.

Comparison with other EU countries
If we look at the European scenario, we see that most EU countries have followed this trend of rising house prices. Spain saw an increase of 3.6%, just behind Portugal, while countries such as Belgium and France saw prices fall slightly.

On an annual basis, Portugal is among the eight EU countries with the highest price increases, with a rise of 7.8% on the previous year. At the top of this list are countries like Poland (+17.7%) and Bulgaria (+15.1%).

Sustained growth since 2010
Between 2010 and 2024, the real estate market in Portugal will show significant growth. According to Eurostat data, house prices more than doubled in nine EU countries, including Portugal, where the increase was 106%. This growth is reflected in regions with high demand, such as Lisbon, Porto and the Algarve, where real estate has been a prime target for investment, both by nationals and foreigners.

This phenomenon of continuous price increases is also being observed in other European markets, such as Estonia (+232%) and Hungary (+218%), which demonstrates a general trend of real estate appreciation in various regions of Europe.

Implications for the future
With house prices continuing to rise, investing in the Portuguese real estate market is an interesting opportunity for those looking for long-term returns. However, for buyers who rely on mortgage loans, the pressure on prices may require greater financial planning and careful analysis of financing conditions.

In short, the recovery in house prices in the European Union, and particularly in Portugal, suggests that the real estate market remains one of the most attractive sectors for investors. Whether for home ownership or investment, property appreciation offers an opportunity to maximize the return on capital invested, provided there is a careful analysis of market conditions.

If you are considering investing in the real estate market in Portugal, IR Group is here to help. With extensive experience in the sector and a diversified portfolio, we offer solutions tailored to your needs. Contact us and find out how we can support your next step in the world of real estate investment.