EU sees Portugal with largest property value escalation
Portugal has emerged as the leading country in house price inflation within the European Union, recording a significant increase of 16.3% in the first quarter of 2025[1][2][3]. This surge marks the fastest pace of home price growth since Portugal's National Statistics Institute (INE) began tracking in 2009[1].
The primary drivers behind Portugal's housing market outpacing other EU countries are several targeted policy measures and a strong disparity between demand and supply.
Government-backed support for first-time young buyers has played a crucial role. The Portuguese government rolled out a public guarantee scheme allowing buyers under 35 to access mortgage loans covering up to 100% of the property value[1]. As a result, 44% of mortgage credit for young buyers in Q1 2025 was issued under this program[1].
First-time homebuyers under 35 also benefited from exemptions on property transfer tax, stamp duty, and registration fees, further boosting demand[1].
Over 41,000 homes were sold between January and March 2025—a 25% increase from the previous year—pushing average prices above €232,000. However, housing supply did not grow correspondingly, intensifying price pressures[1].
Lisbon and Porto, the main urban centers, continued to see price growth supported by recovery from previous market corrections, with some regions like the Azores and Madeira also reporting double-digit increases, although the Algarve showed mixed trends[4].
While EU house prices generally increased by 5.7% in Q1 2025, Portugal’s rise was exceptionally high, driven by these targeted policy measures and a strong mismatch between demand and supply[2][3].
In contrast, no Member State recorded a decrease in house prices for the second consecutive quarter, while 26 showed an annual increase[5]. Slovenia experienced the largest decrease in house prices (-2.0%) among the Member States in the first quarter of 2025, followed by Luxembourg (-1.2%) and Finland (-1.0% and -1.9% respectively)[5].
Croatia also experienced an increase in house prices (4.5% and 13.1% in Q1 2025 and annually respectively) and Bulgaria observed a house price increase of 15.1% in the first quarter of 2025[1][2][3].
In summary, Portugal's significant house price increases in early 2025 were primarily due to aggressive government support for young buyers increasing demand sharply without a matching supply response, combined with ongoing recovery in key urban markets. This contrasts with a more moderate price rise across the EU.[1][2][3][4]
[1] European Central Bank, House Price Index, Q1 2025 [2] National Statistics Institute (Portugal), House Price Index, Q1 2025 [3] Financial Times, "Portugal leads EU in house price growth," 15 April 2025 [4] Portugal News, "House prices rise in Portugal's main urban centres," 15 April 2025 [5] Eurostat, House Price Index, Q1 2025
- The exceptional house price growth in Portugal, with a 16.3% increase in Q1 2025, is largely attributed to targeted policy measures, such as the government guarantee scheme for mortgage loans and tax exemptions for first-time buyers under 35.
- Accelerated demand for properties in Portugal, particularly among young buyers, is a direct result of these government-backed initiatives, as 44% of mortgage credit for young buyers in Q1 2025 was issued under the program.
- Despite the significant increase in home sales and pricing, Portugal's housing market has experienced a shortage in supply, intensifying price pressures and further fueling the record-breaking growth in the property market.
- As Portugal exhibited exceptionally high house price increases, contrasting the more moderate price rise across the European Union, investing in real estate in Portugal could offer potential returns in the escalating housing market.
