“New factors are emerging that are impacting the residential market, namely international instability and expectations of rising interest rates, which tend to dampen demand and investment in housing,” explains Ricardo Guimarães, director of Confidencial Imobiliário. Still, he emphasizes that this trend should be viewed with some perspective: “Despite the decline in activity in 2026 compared to 2025, the volume of transactions remains in line with the average observed since 2019. The market appears to have reached the peak of its growth potential, but it continues to operate at that level.”
Despite the decline in the number of transactions, prices continue to show an upward trend. In the first quarter of 2026, sales prices rose by 4.6% quarter-on-quarter—in line with the previous quarter—and by 21.1% year-on-year. Although the latter figure represents a slight slowdown from the all-time high of 23.4% observed at the end of 2025, it confirms the persistence of strong upward pressure on prices.
The evolution of prices in a context of lower activity reflects, above all, the structural shortage of supply, particularly in the mid-range segments of the market. Despite positive signs in terms of housing production, the volume of new housing coming onto the market remains significantly below the levels recorded two decades ago. In 2025, approximately 26,700 homes were completed (INE data), marking nearly a decade of consecutive growth in construction, but still corresponding to only about one-third of the volume recorded in 2005.
A similar trend can be observed in terms of building permits. In 2025, 41,830 housing units were permitted (INE data)—a positive result, but one that represents just over half of the figure recorded 20 years ago. The realization of investment also remains constrained: in the same year, applications were filed for the licensing of 71,980 new housing units, with licenses issued for only 64% of that portfolio.
In this context, the combination of limited supply and resilient demand continues to drive price increases. According to the SIR – Residential Information System, in the first quarter of 2026, the average sales price in mainland Portugal reached €3,262/m². In the new housing segment, average prices rose to €4,374/m², surpassing the €4,000/m² threshold for the first time. In the existing housing market, the average price stood at €2,959/m².
Image credits: Jakub Zerdzicki | Unsplash
Translated with DeepL.com (free version)
