While house prices across Europe have shown notable variation since the 1990s, Portugal’s property market has been carving its path, marked by some distinctive drivers.
According to a spokesperson for the Portugal Property Team, Portuguese real estate prices have been primarily shaped by “foreign investment through the Golden Visa, contributing to a surge in demand for high-end properties.”
Portugal’s market has also felt the impact of a significant increase in tourism over the past decade. “This has led to a rise in short-term rental properties, such as Airbnb rentals,” the spokesperson added, further accentuating the country’s unique position amidst varied European trends.
Data from the Organisation for Economic Co-operation and Development (OECD) paints a mixed picture across the continent, with property values in some countries soaring by nearly 180% compared to 1996, while in others, prices have stagnated or even declined.
Nick Whitten, EMEA Head of Living Research at JLL, attributes this to “a fundamental undersupply of housing to meet the needs of a growing and changing population across Europe.”
Sweden tops the charts, showing a staggering 176% increase in average prices between 1996 and 2021. Joakim Lusensky, from the Swedish Association of Real Estate Agents, credits this to “strong and steady growth in population and disposable incomes and a long period of meagre mortgage rates.”
The United Kingdom follows closely behind, with a 145% growth in property prices from 1996 to 2021. Marc von Grundherr, Director of Benham and Reeves, points to a shift in the balance between renters and homeowners, exacerbated by 1980s Prime Minister Margaret Thatcher’s policies as the primary driver.
In contrast, other countries like Italy and Germany have seen stagnation or moderate growth. Benjamin Benirschke of the German Central Real Estate Committee cites various factors such as regulations, building material costs, and land scarcity as influencing the German market.
Interestingly, Portugal’s pattern aligns more closely with Germany, experiencing modest growth in the late ’90s. However, the country has witnessed an uptick in property values in recent years, influenced by a unique set of local factors.
Given the larger backdrop of European housing market trends, this places Portugal in a particularly intriguing position.