The “will they won’t they” debate around property prices in Portugal shows no sign of abating. The Portuguese real estate market continues to face mounting pressure as prices are projected to rise until at least 2026.
Despite some stabilisation in interest rates, the market remains constrained by persistent structural challenges, particularly a significant shortage of qualified labour and delays in implementing key governmental programmes, according to the urban consultancy Agenda Urbana.
One of the primary issues highlighted in its latest report is the labour shortage, with skilled professionals in Portugal estimated to be between 80,000 and 90,000. This shortage not only inflates construction costs but also hinders progress in the residential sector.
Analysing the data, the consultants point to the "Construir Portugal" programme and the State Budget for 2025 (OE2025) as critical initiatives that are slow to make a tangible impact on housing availability.
Despite government incentives, such as tax exemptions for young buyers and lower interest rates spurring demand, the market struggles to meet the increasing need for housing.
In 2024, property prices rose by 11% over the first 10 months, marking a cumulative increase of over 105% between 2015 and 2023. The influx of foreign investment – exceeding €2.5 billion in 2024 – and positive migration trends have further intensified demand.
Efforts like modular and industrialised construction are seen as potential solutions to stabilise prices, but these depend on overcoming bureaucratic barriers and workforce limitations.
The OE2025 plans an additional investment of €2.8 billion to boost social housing, aiming to deliver 59,000 units by 2030. However, experts suggest the full impact of these measures will not be felt in the short term.
While waiting for prices to drop may seem appealing, prospective buyers could benefit from the advice of expert local estate agents who can navigate current conditions to secure an Algarve property at the best possible value. Get in touch with Algarve Home Sales for more information.
