Europe’s real estate markets are increasingly split, with countries like Portugal facing a paradox of relatively low prices but growing challenges in accessing housing. That’s the key finding in a newly published comparative study from Terreta Spain, a real estate consultancy dedicated to making property buying and management easier for investors and homebuyers.
A Structural Housing Crisis
According to Terreta’s analysis, Europe is experiencing a structural crisis in housing. Scarcity of new construction, soaring costs, an ageing population, and restricted access to credit are all piling pressure on residential markets across the continent. The study highlights a “two-speed” Europe:
- In Southern Europe, particularly Portugal and Spain, there is strong rental demand and attractive returns continue to draw foreign investors. But local families are increasingly priced out.
- In Northern and Central Europe—covering Germany, Switzerland, and the UK—property markets are more stable but offer lower returns. High purchase costs and heavier tax burdens further deter investors.
- Countries like Italy and Belgium sit in the middle, facing high taxes, less appeal for foreign investment, and notable regional differences.
The Portugal Paradox: Growth vs. Affordability
Terreta Spain dedicates special attention to Portugal, a country that stands out for a stark disconnect between price growth and affordability. While house prices have climbed 83% from 2013 to 2023, average wages have only risen by 36.9%. In some areas, property values surged by as much as 130%, dramatically widening the affordability gap.
From 2019 to 2024, Portugal’s price-to-income ratio soared by 30%—the steepest increase in the European Union, outpacing even Greece and the Netherlands. These trends raise questions about the sustainability of Portugal’s red-hot real estate market. Demand remains robust, particularly from international buyers, but Portuguese households are increasingly struggling to afford homes.
Fragmented Investment Landscape
The study underscores that the differences between national markets are shaped by economic policies, fiscal regimes, and each country’s approach to housing and foreign investment. Southern countries benefit from favorable tax rules and immigration-driven demand, while others grapple with population stagnation and shrinking investor interest.
Looking ahead, Terreta Spain warns that the future health of Europe’s housing markets relies on governments’ ability to boost new construction, maintain competitive tax environments, and encourage population mobility. Without these reforms, the continent risks an increasing divide: dynamic property hubs in some regions, stagnating or shrinking markets in others.
Advice for Investors
For investors eyeing European real estate, Terreta’s message is clear: profitability, regulatory stability, and long-term demographic trends must all be weighed. With no single recipe for success, understanding the unique characteristics of each market is more important than ever as Europe’s real estate landscape continues to evolve.
About Terreta Spain
Terreta Spain specializes in real estate consulting and is committed to simplifying and streamlining the property investment and management process for international and local clients alike.
