Portugal had already been defying continental real estate trends, but any expectation of a sudden price drop should be measured, according to the latest in-depth analysis report from the European Commission (EC).

In line with the figures, “housing prices continued to rise significantly in Portugal, in contrast to most other EU countries”, warned the EC. And, despite the slowdown in growth, prices “remain overvalued”.

In fact, the report points to an increase of overvaluation of property prices of around 30%, “reflecting the strong nominal growth in housing prices over the past year”. This, says the report, reflects a “negative impact on housing affordability, especially for vulnerable groups”.

A slowdown of the real estate market had been identified from data gathered by the National Institute of Statistics (INE) last year, and while the EC expects property prices to be more moderate in the short term, it considered a sharp decline to be “unlikely”.

However, despite the “strong increase” in property prices in Portugal and the estimated overvaluation in recent years, "much of the cross-border investment in housing mitigates internal risks".

Looking for a home but have questions about the current state of the real estate market in Portugal? Contact Algarve Home Sales for advice on buying a home in the beautiful Algarve.