Record Bank Appraisals Drive Setúbal Surge and Stretch First-Time Budgets

Portugal’s red-hot property market has pushed bank valuations to territory never seen before, raising fresh questions about affordability for first-time buyers—and offering unexpected windfalls to owners sitting on appreciating bricks and mortar.

A fresh record, again

The median price at which banks value residential property for mortgage purposes hit €1 995/m² in September, according to the latest release from the National Statistics Office, Instituto Nacional de Estatística (INE). That figure is 1.5 % higher than August and 17.7 % above the same month last year—the most aggressive yearly jump since the pandemic boom of 2021. Behind the headline, nearly 33 000 individual valuations fed the sample, signalling that lenders are still comfortable financing deals even as the number of transactions dips slightly on an annual basis. For households, the new benchmark means that a standard 90 m² flat in a mid-sized Portuguese city is now priced by lenders at roughly €180 000, before taxes, fees or any premium a seller might add.

Setúbal outpaces Lisbon and Porto

If Lisbon traditionally tops the price tables, the Península de Setúbal has stolen the spotlight this year. The region south of the Tagus estuary logged a 25.9 % leap in median valuations over 12 months, dwarfing gains in Lisboa e Vale do Tejo and the ever-popular Algarve. Analysts attribute the surge to overflow demand from the capital, a barrage of infrastructure improvements—notably the modernised Fertagus commuter rail line—and investors seeking cheaper coastal stock with rental potential. Even within Setúbal, the most explosive segment has been apartments, up 28.5 % year-on-year to €2 307/m². Detached houses, while cheaper at €1 459/m², are catching up fast as buyers locked out of Lisbon hunt for garden space and typical Portuguese architecture.

Cheap money keeps the party going

The valuation rally is unfolding even as interest rates remain at their highest in more than a decade. After peaking above 4.2 % in July, the 12-month Euribor eased to roughly 4.05 % at the end of September, while the six-month and three-month benchmarks settled near 3.95 % and 3.75 %, respectively. The pull-back is modest, but it has been enough for banks to reignite a spread war: several lenders now advertise 0 % margin for the first two years if clients channel salary deposits and insurance through the institution. Compared with the summer peak, a typical borrower saves €15–€25 a month on a €150 000 loan, according to mortgage-broker simulations. That extra breathing room is already visible in the appraisal reports requested during credit approval. Industry sources say the pass-through from even small rate dips to higher valuations remains swift, compressing the window for bargain hunting.

Islands break away from the mainland trend

While Setúbal grabs headlines, the Autonomous Region of the Azores quietly registered the sharpest month-on-month jump, up 2.9 % between August and September. The archipelago’s appeal mixes lifestyle migration—remote workers lured by mild Atlantic winters—and a thin supply of modern housing stock, which means every new development impacts the statistics disproportionately. Median valuations for apartments in Ponta Delgada already flirt with €2 000/m², closing the gap with smaller mainland cities such as Leiria or Viseu. Private banks active in the region tell our newsroom that more than half of recent mortgage requests involve buyers relocating from mainland Portugal, the US or northern Europe, a reversal of the emigration pattern that dominated the 90s.

2026: growth persists, but pace may slow

Most research houses—from Bankinter to Standard & Poor’s—expect Portuguese property prices to advance a further 2 % to 4 % in 2026, supported by an anticipated dip in the three-month Euribor to roughly 2 % and a still-severe lack of new housing completions. Yet two caveats stand out. First, the government’s recently approved Mais Habitação package will oblige large landlords to place vacant units on the market or face penalties, a move that could inject supply at the margin. Second, the European Central Bank has hinted that rate cuts in early 2026 could lag behind investor hopes if inflation proves sticky, limiting how far mortgage costs fall. Even so, Setúbal and the Azores remain on analysts’ watchlists as regions where double-digit valuation growth could persist thanks to tourism infrastructure and improved connectivity.

What buyers and owners should monitor now

For households weighing their next steps, three indicators merit close attention. First, keep an eye on weekly Euribor fixes; every 0.25-point swing changes monthly repayments on a €150 000 loan by about €20. Second, track building-licence data—rising permits in Setúbal or the Azores could temper price pressure within 18 months. Finally, follow the Portuguese banking regulator’s quarterly stress tests; a tougher stance on debt-to-income ratios would force banks to mark valuations more conservatively. Until any of those gears shift noticeably, the prevailing dynamic remains one of scarce supply, eager credit and valuations climbing at a pace that outstrips wages—a reality many residents already feel when house-hunting on a Saturday morning.