House prices in Portugal

Property in Portugal is some of the best priced in Europe. Recent figures from National Statistics Institute show the average house price in Portugal at just EUR 1,187 a square metre - EUR 1,243 for flats, and EUR 1,090 for houses. That compares to EUR 2,649 in the UK, or EUR 2,300 in France, for instance.

However, property prices vary greatly between regions. The two cheapest areas, Centro and Alentejo, have house prices a bit more than half what you'd pay in the Algarve - in both regions, you could buy property for less than EUR 1,000 a square metre. If you're a bargain hunter, this isn't a bad place to start, around cities like Evora or Elvas, Coimbra or Aveiro.

House prices in Portugal, 2018 (EUR per square meter):

RegionPrice (EUR)RegionPrice (EUR)
Algarve1524Norte1071
Lisbon1456Centro973
Madeira/Azores1222/1015Alentejo963

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Portuguese rooftopsThe Algarve is truly golden

The Algarve is the most expensive area to buy in, with strong foreign interest. The 'golden triangle' of the Algarve between Vale do Lobo, Quinta do Lago, and Almancil in particular has seen interest at the top of the market from investors in the 'Golden Visa' program, which affords a long-term Portuguese residence permit to individuals investing over EUR 500,000 in property. EUR 1,524 a square metre is the going price here, though you'll generally pay more on the coast, and far less even just a few kilometres inland.

The greater Lisbon area is also high up the list, which is hardly surprising given Lisbon's status as the capital and financial centre, as well as a major tourist hotspot. In fact, Lisbon is the most expensive place in Portugal to buy larger apartments, at EUR 1,430 a square metre for 'T3' (three-bedroom) flats.

Somewhere in the middle comes the North of Portugal, including the thriving city of Porto, as well as the island Portuguese territories - Madeira and the Azores.

Of course, these prices are averages over large regions. The major metropolitan areas have much higher prices - within the centre of Lisbon, expect to pay EUR 2,500 or more per square metre for large apartments. Porto will generally cost more than smaller cities in Norte, too.

Find your home in Algarve

Street view LisbonWill the price growth last?

Some observers have raised concerns about the sustainability of current pricing in real estate. Some younger Portuguese are now finding it difficult to buy their first properties, and while the construction industry is now increasing the number of housing starts, there's still a shortage of newbuild in many areas.

But Portugal's economy is doing well. Government debt has been reduced, economic growth is running above 2%, and unemployment has been reduced. You can get a feel for the distance the country has travelled since the credit crunch by looking at the yield on Portuguese ten-year bonds. As recently as 2012, Portugal had to pay investors 18% to lend the country money - by 2016 the rate was down to 2.3% and now it's fallen even further, to under 1.9%. While growth is decelerating, the fundamentals look pretty good.

It's also worth noting that the ratio of house prices to GDP per capita is relatively low for Europe, at 24 times. By comparison, property in the UK is valued at 74 times GDP per capita, and in France at 41 times. That suggests investors shouldn't get too worried about the Portuguese housing market running out of steam.

Real estate prices are heading up

Until recently, Portugal seemed to have missed out on the European property boom. It's now making up for lost time; according to Eurostat, in 2017 it now has the fourth highest price growth in Europe, after Estonia, Lithuania and the Republic of Ireland. Property prices troughed in 2014 and have been going up ever since - the last quarter of 2017 saw prices rise by 10.5% year on year, and the first quarter of 2018 saw this accelerate to 12.2%.

Although there's strong foreign buyer interest, domestic demand is strong, too. The number of transactions is high, with Q3 2018 seeing over 38,000 units changing hands, an increase of nearly a quarter year-on-year. And while Lisbon and the Algarve may be hitting the headlines, the price rise is widespread across the country; figures from Confidencial Imobiliário show that every single municipality reported an increase in house prices in the first quarter of 2018 - not just the hotspots.

The cheapest cities in Portugal

Still a bargain

You can blame 'property porn' on the TV, you can blame Peter Mayle's Year in Provence and Chris Stewart's Driving over Lemons, or you can blame easy credit and quantitative easing - but the fact is, whoever's responsible, there aren't many bargains in residential property left.

But Portugal does still offer attractive property prices. And unlike some other 'bargain' countries, it offers good infrastructure and a legal system you can rely on to protect your interests. It even offers a ten-year tax holiday to foreigners moving to the country under the Non Permanent Resident programme. All this plus pasteis de nata! What more could you want?