In 2025, Portugal became the world’s 3rd most expensive country for houses, thanks to soaring prices and international demand. Explore what’s driving this trend and what it means for homebuyers and investors.
Portugal Becomes One of the Countries With the Most Expensive Houses in 2025
The worldwide real estate market has seen surprising shifts at the start of 2025. A standout revelation is Portugal’s leap to the 3rd position in the global ranking of the countries with the most expensive houses, surpassing traditional powerhouses and aligning with some of the most dynamic property markets across Europe and Asia.
Global Real Estate Trends at the Start of 2025
A recent international report analyzed 55 real estate markets, noting an average increase of 2.3% in global house prices compared to 2024. Although this is below the long-term trend of 5.1%, it represents the highest uptick in nearly a year, largely due to lowered financing costs that encourage both buyers and investors.
Portugal’s Real Estate Market Soars
Portugal’s real estate market stood out with remarkable numbers: a nominal growth of 16.9% in house prices compared to Q1 2024, and a real increase of 14.8%. Even on a quarter-to-quarter basis, home values rose by 5.7%, supporting a steady upward trajectory that cements Portugal’s reputation as a top-tier property destination.
Major regions like Lisbon, Porto, and the Algarve continue to attract strong interest, but emerging cities such as Braga, Setúbal, and Funchal are quickly gaining in popularity with both domestic and international buyers.
Why Are Houses in Portugal Getting So Expensive?
Several factors contribute to Portugal’s status as one of the countries with the most expensive homes in 2025:
- International Demand: Safety, appealing climate, and reliable appreciation attract global investors, who see Portuguese property as a secure and profitable asset.
- Local Buyers: Portuguese homebuyers are becoming more quality-conscious, seeking modern, centrally located, and high-value properties, especially in urban centers.
- Tourism and Expat Appeal: Portugal’s growing tourism industry and its popularity among expatriates continue to fuel demand, driving prices higher.
Internal Challenges: Affordability Crisis
Rapid price escalation has brought attention to inequalities in housing access. Many middle-income families now face significant challenges in purchasing homes, especially in cities like Lisbon and Porto where affordability is becoming a growing concern. This underscores the urgent need for regulatory measures and increased supply of affordable housing in prime locations.
How Does Portugal Compare Globally?
While many regions experienced nominal property price growth, global averages dropped in real terms by 0.4% due to inflationary pressures. In sharp contrast to Portugal’s upward momentum, other major markets like Mainland China and Hong Kong saw property values decline by over 6%.
What’s Next for Portugal’s Real Estate Market?
Forecasts suggest that Portugal will maintain its place among the world’s most expensive real estate markets, buoyed by continuing foreign investment and robust tourism. Future price increases may be tempered by economic factors in the wider European landscape, but the market’s resilience and attractiveness for investors remain strong.
Portugal’s surge to 3rd place among the countries with the most expensive houses in 2025 highlights both global market shifts and unique national strengths. For investors, Portugal offers promising returns and stability. For residents, however, the steep rise in housing costs calls for comprehensive strategies to ensure access for all.
