)Property prices in Portugal increased by 9.8% in the third quarter compared to the previous year, the largest rise in nearly two years. This is according to the country’s statistics institute, up from a 7.8% year-over-year increase in the second quarter.
Square Asset Management, a Lisbon-based firm overseeing over €2.5 billion in real estate, attributes the price increases to a limited housing supply, citing lengthy delays in obtaining building permits, particularly in Lisbon.
Pedro Coelho, CEO of Square, stated that these permit delays, sometimes lasting years, contribute to higher home prices. He anticipates prices will remain elevated due to lower interest rates and continued demand from foreign buyers.
This shortage of homes has occurred alongside rising demand from international buyers, including those from the United States, drawn by Portugal’s climate and comparatively lower cost of living. Reduced borrowing costs are also stimulating local demand.
Portugal’s foreign population has more than doubled since 2018, reaching a record one million people, approximately 10% of the total population.
Concerns about rising housing costs led the Portuguese government to remove real estate investments from its golden visa program and reduce tax incentives for new residents in an attempt to moderate the market. Social housing currently represents only 2% of Portugal’s total housing stock – among the lowest percentages in the EU.
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