Inland Portugal Leads Housing Price Surge, Average Hits €2,970 /m²

House prices in Portugal: inland boom pushes national average close to €3,000/m²

Portugal’s housing market keeps setting new records. Fresh figures from the property portal Idealista show that the asking price for residential stock reached €2,970 per square metre in October, up 8.7 % on the same month a year earlier and roughly 1.5 % higher than in July. Although the pace of growth has eased since the double-digit jumps seen in late 2024, every district capital and both autonomous regions still logged an annual increase.

Three smaller cities steal the spotlight

The most dramatic changes occurred far from the large metropolitan areas:

| Rank | City | YoY change ||------|---------------------|------------|| 1 | Beja | +30.6 % || 2 | Santarém | +27.8 % || 3 | Portalegre | +24.1 % |

Guarda (+21 %) and Setúbal (+19.2 %) complete the top five. At the other end of the scale, Porto (+4.3 %), Lisbon (+4.1 %) and Vila Real (+3.7 %) grew more slowly—though they did still rise.

Where buying a home costs the most (and the least)

Despite more moderate growth, Lisbon remains by far the priciest market, with sellers in the capital asking €5,886/m² on average. The only other municipalities above €3,800 are Funchal (€3,907/m²) and Porto (€3,844/m²). The Algarve hub of Faro comes next at €3,370/m², while Setúbal just misses the €3,000 line.

Buyers with tighter budgets still look inland. Vila Real (€1,397/m²), Beja (€1,326/m²), Bragança (€1,060/m²), Guarda (€1,005/m²) and Portalegre (€1,003/m²) are the only district seats where advertised prices hover around—or even under—the €1,400 mark.

Why the interior is catching up

Multiple forces are converging on Beja, Santarém and Portalegre to drive those eye-watering percentage gains:

Thin pipeline of new homes – Building permits have not recovered to pre-pandemic levels, so supply is failing to match both local demand and inflows of newcomers.

Remote-work migration – Since 2021, a steady stream of Portuguese households—and an increasing share of foreign residents—have been swapping Lisbon and Porto for lower-density areas in search of space and cheaper living costs.

Tourism and wine routes – Rural tourism and enotourism in the Alentejo have lifted short-term rental revenues, making housing assets more attractive to investors.

Low starting point – With prices historically subdued, even moderate nominal increases translate into double-digit growth rates.

Public spending on infrastructure – Road upgrades in the Baixo Alentejo and the conversion of military land into civilian zones have improved accessibility, further fuelling interest.

Affordability stretched to the limit

Rising values come at a cost for residents. The latest Ministry of Housing data put the price-to-income ratio at 190.5 in the second quarter, an all-time high. Households now devote 71 % of disposable income to mortgage payments on average, and renters face an even harsher 83 % effort rate. In Lisbon the figures exceed 100 %, effectively locking many wage earners out of the market unless they receive outside financial help.

Government and local counter-measures

• "Construir Portugal" and the revised "Mais Habitação" framework promise up to 59,000 new dwellings by 2030, VAT cuts on construction and IMT exemptions for first-time buyers under 35.• Fresh legislation lets municipalities rezone agricultural land for controlled-cost housing and convert empty state buildings into rental units.• Landlords who cap rents at €2,300 per month can qualify for a reduced 10 % IRS rate, down from 25 %.

Permitting activity is indeed rising: more than 10,000 residential licences were issued in the first half of 2025, up 12 % year-on-year. Yet the sheer imbalance between demand and supply means advertised prices are still climbing.

Looking ahead to 2026

Banks and consultancies diverge on the speed of future gains. Caixa Geral de Depósitos sees continued upward pressure, though slower than in 2025. Bankinter, by contrast, believes higher interest rates could flatten the curve or even lead to a slight pull-back. Either way, most analysts doubt that a significant correction is likely unless housing starts move sharply higher.

For now, Portugal remains a sellers’ market—especially in the interior, where prices had furthest to rise and momentum is strongest. Buyers hoping for relief may have to wait for the government’s construction push to translate into keys in doors.