The Portuguese real estate market is undergoing a significant shift, with affordable homes becoming increasingly scarce. According to data from idealista, the supply of properties for sale in Portugal priced under €200,000 has plummeted by an astonishing 73% over the last five years. This trend, spanning from the third quarter of 2020 to the same period in 2025, highlights a growing concern for families and first-time buyers struggling to find entry-level housing.
Affordable Housing Supply Dwindling Nationwide
Not just a passing trend, the lack of affordable homes is impacting nearly all corners of Portugal. Major cities and regional hubs—including Lisbon, Porto, Funchal, Faro, Setúbal, Aveiro, Braga, and Ponta Delgada—have experienced their stock of sub-€200,000 homes cut by almost half or more. The sole exception is Vila Real, where the supply of affordable housing has bucked the national trend by rising 16%.
Mid-Range Options Decrease as Luxury Listings Surge
It’s not only the most affordable segment that’s feeling the squeeze. The market for homes priced between €200,000 and €300,000 has also contracted, with available properties down by 32% over the same period. Meanwhile, more expensive homes are hitting the market in record numbers. Listings for properties priced between €400,000 and €500,000 have climbed by 37%, while homes costing more than €500,000 surged by 42%.
What’s Fueling the Price Shift?
Several factors are contributing to this upward pressure on prices. Skyrocketing construction costs, longer licensing and approval times, and heavier tax burdens are making it harder and more expensive to build and sell homes at accessible price points. Consequently, developers are increasingly focusing on higher-end segments, where profit margins are better, further limiting availability for everyday buyers.
What Does This Mean for Buyers and Investors?
For Portuguese families, especially younger buyers or those on average incomes, finding a home under €200,000 is rapidly becoming a challenge. The shrinking pool of affordable housing is fueling debates about the nation’s housing policy, urban planning, and the need for government action to support affordable development.
For property investors, the trend points to growing demand in the mid and upper tiers of the market, but also highlights a significant opportunity for those able to offer reasonably priced housing—provided regulatory and development hurdles can be overcome.
Looking Ahead: Can the Market Rebalance?
As the challenge of affordability deepens, real estate professionals, policymakers, and developers are all watching closely to see if targeted interventions or changing market dynamics will help bring more economical homes back onto the market. For now, however, those searching for affordable homes in Portugal face an increasingly competitive and expensive landscape.
