Portugal sees biggest increase in house prices in Europe – only overtaken by North Macedonia

Portugal has almost topped an index of 60 countries experiencing increases in house prices with only North Macedonia seeing higher.

This is according to the Bank for International Settlements (BIS) in a study comparing the first quarter of the year compared to the first quarter in 2024.

According to the data, based on statistics collected by the National Statistics Institute and Confidencial Imobiliário, price inflation in Portugal saw a 13.7% increase in the first three months of the year like-for-like on last year.

Only North Macedonia saw a greater increases at 18% (17.7% 1Q 2024).

In historic terms, it was the sharpest like-for-like increase since the BIS has been collecting data, with Portugal’s house price increases outstripping countries like Hungary, Russia, Mexico, the Philippines, Ireland, Norway and Switzerland.

The increases exceeded Portugal’s previous record of 11.4% recorded for the first quarter of 2018 and represent the fourth consecutive quarter that house prices have risen in Portugal.

The question is whether the constant increases in house prices is sustainable with many experts, the banks and industry leaders warning of a worsening housing crisis due to a severe imbalance between high demand and insufficient housing supply.

The current trend for rising prices is making access to housing even more difficult for Portuguese families, and while demand remains strong from foreign buyers and through government incentives, a lack of new construction and high interest rates are creating an unsustainable situation.

And looking at 20 countries in the Euro Zone alone, Portugal actually tops the list at a considerable distance from Spain (9.3%), Slovakia (9%), and even the Netherlands (6.8%).

Other countries saw more moderate price increases with Italy at +3%, and Germany +2% while France stabilised at slightly below 0%.

The countries that saw house prices drop were Austria (-2.7%), Finland (-2.4%), Belgium and Luxembourg (-0.8%), and France (-0.5%). Portugal also stood out as among the advanced economies that overall saw a real variation in prices that was substantially lower at 1.2%.

The Bank for International Settlements (BIS) is an international financial institution that acts as a bank for central banks and a forum for international cooperation on monetary and financial stability. Established in 1930, the BIS promotes global economic health through research, policy analysis, financial services, and by providing a space for central bankers and financial regulators to exchange ideas and coordinate actions.