House sales surge 17.2%: what does this reveal about the Portuguese real estate market?

Home sales in Portugal saw remarkable growth in the second quarter of 2025: transactions increased by 15.5% compared to the previous year and prices rose by 17.2% in one year—the highest rate of increase ever seen. This scenario highlights a booming market, marked by imbalances between supply and demand, but also offers valuable clues for investors who want to take advantage of this moment. In this article, we will outline the factors driving this trend, the inherent risks, and the windows of opportunity that are opening up.

What the numbers tell us:

• 42,900 homes were sold between April and June 2025, representing an increase of 15.5% over the same quarter of the previous year.
• The average price of homes rose 17.2% year-on-year, the most significant increase ever recorded.
• Existing homes further fueled this rise, with an 18.3% increase in value, while new construction grew by 14.5%.
• In quarterly terms, prices rose 4.7%, with existing homes increasing by 5.1% and new homes by 3.8%.

These figures reveal a market in clear acceleration, where demand is putting strong pressure on prices and existing supply is struggling to keep up.

Main forces behind the rise:

• Imbalance between supply and demand

Demand for housing remains high, fueled by factors such as more affordable interest rates, support for young buyers, and confidence in future appreciation. However, the supply of existing homes is difficult to replenish quickly, especially in central and coastal areas. This increases pressure on prices.

• Incentives and public support

The exemption from IMT and stamp duty for young people (up to 35 years old), as well as the introduction of public guarantees for mortgage loans, have stimulated home purchases.

• Preference for existing homes

Although new construction has also grown, above-average appreciation has been observed in used homes, indicating that many buyers are opting for completed properties, possibly due to immediate availability or established location.

• Strong participation by families

The overwhelming majority of homes purchased were acquired by families with national tax domicile, reinforcing that, in these times of appreciation, the domestic market plays an important role.

Risks and signs to watch:

• Future slowdown: Such rapid growth rates cannot continue indefinitely. Credit tightening or interest rate increases may moderate demand.
• Pressure on construction costs: Rising material and labor costs may make new developments more expensive, reducing new supply.
• Reduced affordability: Price increases may deter buyers with lower purchasing power, reducing demand in some regions.
• Regulation and control: Local authorities may intervene to curb excessive speculation or limit permits in sensitive areas.

Opportunities for strategic investors:

• Investment in emerging areas: While city centers are saturated, outlying municipalities with good accessibility may offer attractive margins for appreciation.
• Focus on urban regeneration: Buying used properties and renovating them can generate added value at a time when prices for used homes are rising more sharply.
• Diversification between new and used: Mixing investments in new and used housing can balance risk and return.
• Premium segments: The overall rise in the market also benefits top-end or luxury properties, which tend to maintain their value even during adjustments.

The picture painted by the latest data shows a real estate market in Portugal experiencing a period of strong appreciation. But for well-prepared investors, this moment is not only one of tension—it is also one of opportunity. Those who know how to read the signs, act strategically, and diversify intelligently will be able to take advantage of this upward cycle.

Do you want to align your portfolio with the strongest trends in the Portuguese real estate market and invest safely and strategically? IR Group is ready to help. Contact us and find out how to turn this data into real opportunities.

Source: Idealista – “House sales grow again – and prices reach their highest ever increase”