Portugal’s high-end housing market remains a hotbed for investors and buyers, fueled by demand that consistently exceeds available properties. This exclusive market can be segmented into three tiers: Affluent, Premium, and Luxury. These are key insights from the study “The High-End Residential Market in Portugal – Impact and Trends," conducted by NOVA SBE for Porta da Frente Christie’s, drawing on data from idealista and unveiled on February 25, 2025.
The study’s core objective is to examine the impact of the upscale residential market on Portugal’s economic landscape. Over nearly four years (Q1 2021 to Q2 2024), property values have surged by over 23%, with Lisbon, Faro, and Porto accounting for 95% of the supply.
Leading the study were Pedro Brinca and João Duarte, researchers at NOVA SBE.
Defining High-End Real Estate
What exactly qualifies as high-end? We’re talking about properties where the price per square meter ranks among the country’s top 10%. This segment further breaks down as follows:
- Affluent: Properties falling within the 90th to 95th percentile (10% to 5% most expensive).
- Premium: Properties ranging from the 95th to 98th percentile (5% to 2% most expensive).
- Luxury: The top 2% of the market.
The study also acknowledges the influence of the Covid-19 pandemic, revealing both setbacks and recoveries across various metrics.
Unveiling the High-End Housing Supply
The supply of premium residences in Portugal heavily concentrates in the districts of Faro, Lisbon, and Porto. Between Q1 2021 and Q3 2022, the number of listings fell dramatically, from approximately 33,000 to 21,000.
The research reveals, "Market stabilization occurred after Q3 2022, indicating the beginning of a steady recovery. By Q4 2022, the quantity of properties available remained notably lower than in Q1 2021. This recovery continued into 2023, peaking in the final quarter. By Q2 2024, the closing point of our analysis, around 27,000 high-end properties were on the market."
The Affluent segment consistently shows the highest volume of listings, followed by Premium, and then Luxury.
Across all segments, there was a significant downward trend between Q1 2021 and Q3 2022. The Affluent sector decreased from about 16,000 properties to around 11,000. The Premium sector dropped from roughly 10,000 to 7,000. Luxury homes saw a decline from 6,000 to approximately 4,000. Post-Q3 2022, all segments experienced a recovery, with Affluent showing the strongest rebound. Regarding the number of listings, the growth rate during this period remained negative, falling by -16% for Affluent, -13% for Premium, and -15% for Luxury.
Prime Locations: Where Are the High-End Opportunities?
In 2023, the top five areas boasting the largest concentration of high-end homes were:
- Cascais and Estoril (8,952)
- Quarteira (5,066)
- Santo António (4,017)
- Avenidas Novas (3,472)
- União de Freguesias de Cedofeita, Santo Ildefonso, Sé, Miragaia, São Nicolau e Vitória (3,372)
Data through Q2 2024 showed that Lisbon, Faro, and Porto accounted for over 95% of the total offering. "Lisbon leads the way, capturing over 60% of the high-end properties during the entire period (…). Faro follows, accounting for about 25% and demonstrating a growth trend potentially driven by surges in tourism and foreign investment. Porto captures less than 10% of the market. The remaining districts collectively account for roughly 5%."
Additional highlights from the study:
- Emerging Hotspots: Setúbal, Beja, and Madeira have seen significant increases in available properties, especially in the Affluent segment.
- Property Preferences: Villas comprise roughly one-third of the listings. Since 2021, 2-bedroom apartments have increased by 5 percentage points (from 30% to 35%), while studios and 1-bedroom apartments have decreased in proportion.
- New Construction’s Impact: New builds predominantly fueled the supply uptick in 2022, particularly in the Affluent and Premium sectors. This growth happened amidst rising construction costs (approximately 30% between 2021 and 2024).
- Development Trends: Since new housing construction permits remained steady overall, it indicates that developers focused predominantly on high-end residential developments between 2021 and 2024.
Understanding Demand Dynamics
"Examining the sector broadly, the pressure of demand on supply had accelerated rapidly to peak by Q3 2023, and has broadly stabilised thereafter," the study indicated; furthermore it highlights "a high level of volatility of the rate of sale of listings, showing significant variation over the period."
The report continues, "There was substantial fluctuation in the number of leads generated per listing over the period, without consistent upward or downward trends. By the end of Q2 2024, demand was lower compared to Q1 2023. This trend has stabilised at a lower level, reflecting the impact on the market of rising interest rates, the end of golden visas in 2023, and the end of the Non-Habitual Resident (NHR) regime in 2024."
The Affluent and Premium segments have followed a similar trajectory. However, in the Luxury segment demand remained robust, with a slight drop in Q2 2023.
Price Appreciation: A 23% Increase
The nominal price per square meter for high-end residential properties advanced by 23%. This increase is indicative buyers paying more in 2024. While seemingly substantial, the real price increase, accounting for inflation, was only 3%. Much of the increase was offset by inflation.
In segment analysis, the nominal price per square meter for the Luxury segment stands out, followed by Premium, and lastly, Affluent.
Economic Impact: A Significant Driver
The study emphasized the sector’s socio-economic significance to the Portuguese economy.
Key economic findings:
- The sector’s impact is substantial.
- Construction is a major contributor.
- Sales are the a major contributor.
Predictions for the Future
The study predicts that property prices will continue to rise in 2025, due to rising demand.
The experts also pointed out there are risks associated with economic volatility, which could be caused by international conflicts, energy crises, and other factors.
