A new report from the European Commission (EC) says that the high property prices in Portugal are “unlikely” to fall sharply any time soon. In fact, they're expected to keep rising, albeit more slowly.

“Housing prices in Portugal are expected to continue to grow, but at a slower pace, with a sharp reduction in housing prices being unlikely,” reads the Brussels assessment on Portugal.

The EC, in fact, expects “moderate house price growth going forward as interest rates are on the rise”. The reasons given are the shortage of properties on the market and strong demand from international investors.

“Over the last decade in Portugal, house prices have doubled in nominal terms, having registered an increase of 34% in the last three years,” writes the EC. In 2022 alone, “prices rose by around 13%”.

The assessment comes one year after the International Monetary Fund identified Portugal as one of the countries with the highest risk of a sharp correction of property prices in the medium term.

The EC does, however, recognise that the Portuguese real estate market and its implications for financial stability “continue to be an area of concern”, given that “90% of mortgages in Portugal are at a variable rate”.

It adds that the rising Euribor rates “could substantially increase loan instalments” and cause “financial stress” to families in the country.

But it also believes mitigating factors will encourage resilience, such as the macroprudential measures adopted by the Bank of Portugal and housing programmes such as Mais Habitação.

Whether you're considering selling your property or looking to buy at the best price, on-the-ground expertise during these uncertain times is invaluable. The Algarve Home Sales team is here to provide any help or advice you might need.