Portugal House Prices Climb: Still Luring Foreign Buyers

Despite a rise in house prices, Portugal remains appealing to foreign investors, ranking 14th in global housing price increases among 56 countries.

Portugal has recently secured the 14th position in a global index that tracks the most significant increases in housing prices, as analyzed across 56 countries. The Knight Frank Global House Price Index reveals that house prices in Portugal have experienced a notable rise of 6.5% over the past year, with a more modest increase of 2.5% over the last six months and 2.9% over the past three months. This places Portugal ahead of several notable economies, including France, Germany, Switzerland, and the United States.

Leading the pack in this index is Turkey, which, despite witnessing a staggering increase of over 50% in housing prices over the past year until March, has recently seen a decline of 9.9%. Following Turkey in the rankings are Bulgaria (16%), Poland (13%), Colombia (12%), Taiwan (10.5%), and Greece (10.4%), marking them as the only countries, aside from Turkey, to experience growth exceeding 10%.

Interestingly, the Australia real estate market, which recorded a growth of 7.5% over the past year, has faced a slight setback with a 1% decline in the last three months. The report also highlights a concerning trend within European markets, which account for 8 out of the 11 markets that have experienced price declines. Countries such as France (-5.2%) and Germany (-3.9%) are feeling the pinch of slower economic growth coupled with high inflation.

The report concludes with a notable observation: there is an acceleration in global housing price growth, with the average annual price growth reaching 3.6% over the past year until March, up from 3.2% in the preceding six months. The first quarter of 2024 has continued to show robust growth in real estate markets, achieving a growth rate of 3.6%. This marks a significant improvement from the 2.2% growth recorded in the second quarter of the previous year, a period during which markets were grappling with the repercussions of rising global interest rates since early 2022.

Despite the annual price growth of 3.6%, this figure remains below the long-term trend of 5.6%. Quarterly growth has seen a rise to 1.3%, an increase from the previous two quarters, yet it still lags behind the long-term average of 1.4%. It is noteworthy that last year, house prices increased in most global markets, driven by a persistent lack of homes for sale and sluggish construction rates. This scenario has resulted in relatively healthy demand, propelling prices to unprecedented heights. However, in the long run, only a reduction in debt costs is likely to sustain this price growth.