The Bidders

Essay · society · September 2026

Who pushed Portuguese house prices up? The usual suspects are foreign buyers, golden visas, investment funds and tourist flats. Each left a mark, and in the Algarve and the old centres of Lisbon and Porto a deep one. But across the country the larger story is plainer: many more households and far too few new homes.

Reading time ≈ 14 min Buyers → money → builders A follow-up to The Rent

The question

The Rent showed that real house prices in Portugal more than doubled between 2013 and 2025, and that the young pay most of the bill. It said, in one sentence, why: construction collapsed while demand from tourism, foreign buyers and cheap credit rose. This essay takes that sentence apart. For each of the explanations people offer, it asks how many homes, how much money and where.

The question matters because the answers point to different remedies. If foreigners and funds did it, the answer is to keep them out. If tourist flats did it, the answer is to limit them. If the country simply has more households than homes, the only lasting answer is to build. No study splits the rise into neat shares by cause, and this one does not either. But the orders of magnitude can be set side by side, and they are not close.

6%of homes sold in 2024 went to buyers with a tax domicile abroad, 10% of the value; in the Algarve, 24% and 36%

~1%of home sales were golden-visa purchases, in the IMF’s estimate, before the route closed in 2023

+883,000residents between 2013 and 2025, all of the increase from migration

495k vs 188khouseholds added against new homes completed, 2014 to 2025

The gap

What prices outran

Start with what a price rise of this size is measured against. Between 2013 and 2025 real house prices rose to 2.2 times their starting level. Real household disposable income rose by about a third, the population by 8 per cent and the real cost of building a new home by about a fifth (Figure 1).[1] Building costs rose, but nowhere near enough to explain prices; and incomes rose, but at a pace that would have justified perhaps a third of the increase, not the whole of it.

Fig. 1 — Portugal, index 2013 = 100: OECD real house price index; real household gross disposable income (deflated by the household consumption deflator); construction cost index for new residential buildings deflated by the HICP; resident population on 1 January (INE revised the series in 2022). Data: OECD, Analytical house price indicators; Eurostat nasa_10_nf_tr, sts_copi_a, prc_hicp_aind, demo_gind; author’s calculation.

The Banco de Portugal, in the most complete study so far, puts it this way: the rise was “induced mainly by demand forces” meeting a supply that could not respond.[2] The question is whose demand.

The foreign buyer

How many, and where

The national statistics office records the tax domicile of every buyer. In 2024 buyers domiciled abroad bought 9,774 homes, 6.3 per cent of all sales, and paid €3.5 billion for them, 10.2 per cent of the value. The share peaked in 2023 at 7.6 per cent of homes and 12.7 per cent of the value, and fell in 2025 to about 5 and 8 per cent, on the figures reported so far.[3] The value share is higher because foreign buyers pay more: €287,000 on average for buyers from the rest of the EU and €422,000 for those from outside it, against €207,000 for buyers domiciled in Portugal. Per square metre, buyers from abroad paid 30 per cent more in early 2026, and 35 per cent more in Greater Lisbon.[3][4]

“Domiciled abroad” is not the same as foreign. About a fifth of those buyers are Portuguese living abroad, often emigrants buying a home for their return.[5] And many foreigners who buy are residents: households born abroad and living in Portugal bought 31,000 homes in 2024, more than three times as many as buyers domiciled abroad. The largest groups among foreign-born buyers were born in Brazil, Angola and France, countries with long ties of migration to Portugal.[3] They are part of the resident demand discussed further on.

Where the foreign buyer matters is geography (Figure 2). In the Algarve, a quarter of the homes sold in 2024 and more than a third of their value went to buyers domiciled abroad; in Madeira, one in ten. The Algarve alone took 27 per cent of all purchases by buyers from abroad and 38 per cent of their value; Greater Lisbon, 15 and 28 per cent. In Greater Lisbon as a whole the foreign share was 5 per cent of homes, but that average hides the historic centre: in Lisbon’s urban rehabilitation area, non-residents bought a third of the homes sold in 2023 and paid 41 per cent of the value. In the Norte region, which includes Porto, the share was under 4 per cent.[3][6]

Fig. 2 — Share of homes sold in 2024 to buyers with a tax domicile outside Portugal, by number and by value of transactions, NUTS II regions (2024 version). Tax domicile is habitual residence for individuals and registered office for companies, not nationality. Data: INE, Estatísticas de Preços da Habitação, 4th quarter 2024, Figure 13.

Money from abroad can also be followed through the balance of payments. The Banco de Portugal’s figures for non-residents’ purchases of Portuguese property run at about €0.4 billion a year before 2013, jump to €1.5 billion in 2014 and reach €3.9 billion in 2025 (Figure 3). Set against the €41 billion that all home sales were worth in 2025, that is about a tenth, which agrees with the tax-domicile figures.[7][3] By country, the largest investors since 2019 have been British, French and American buyers, followed by Brazilians and Germans.[7]

The golden visa

A small door, much argued over

Between October 2012 and October 2023 Portugal granted a residence permit to anyone who bought property worth €500,000, or €350,000 for rehabilitation. It granted 12,718 of these golden visas, 11,383 of them for property, with €6.45 billion invested in real estate: about €600 million a year on average, and 88 per cent of all the money the scheme brought in. Chinese nationals received the most visas, followed by Brazilians, Americans, Turks and South Africans.[8] The Mais Habitação law closed the property and capital-transfer routes from 7 October 2023, though applications already under way were allowed to continue.[8]

Fig. 3 — Purchases of Portuguese property by non-residents (balance-of-payments real estate investment, annual sum of quarters) and investment through the property routes of the golden-visa scheme (purchase and rehabilitation; 2023 covers January to September), billion euros. Data: Banco de Portugal, BPstat, series 12565842; SEF, ARI statistical maps 2012–2023.

The scheme’s money was a sizeable part of foreign purchases in 2014, when the Chinese demand was at its height, and a small part after 2021. Against the market as a whole it was small: the IMF estimated that golden-visa buyers made about 1 per cent of transactions and 2 per cent of their value, and judged that ending the route was “unlikely to have a material impact in aggregate”.[9] The one careful study of its price effect finds what one would expect from a threshold: homes priced near €500,000 were bunched at that price and cost about 15 per cent more, a finding significant only at the 10 per cent level.[10] The golden visa priced a narrow band of expensive homes. It did not set the price of a flat in Amadora.

The funds

The companies that buy homes

The other suspect is the institutional investor: the fund or company that buys homes by the building and rents them out. The statistics office also classifies buyers by sector. Companies, funds and other non-household buyers took between 13 and 15 per cent of home sales in every year from 2021 to 2024, and about 12.5 per cent in 2025. Their share is higher in Madeira (22 per cent) and Greater Lisbon (17), and their average purchase in 2024, €233,000, was only a little above that of households, €214,000.[3] That is the profile of a steady market of developers, companies and small investors, not of a wave of institutional buying.

The timing does not fit either. The property held by Portuguese real-estate investment funds fell from €14.5 billion in 2013 to €10.6 billion in 2019, the years in which house prices took off, and only then rose, to €25 billion in 2025. Most of it is offices, shops, hotels and logistics; the regulator’s figures, as reported in the press, put housing at 13 to 17 per cent of fund portfolios in 2022 and 2023.[11] Nothing in these figures looks like the large corporate landlords of Germany or parts of Spain. The funds have arrived late in housing, and they are growing, but they did not start the boom.

The tourist flat

Where the neighbours left

Short-term rentals, the alojamento local, are the one foreign-demand channel whose effect on prices has been measured with some care, and the effect is real. The register today lists 111,852 active units on the mainland, about 2 per cent of all dwellings.[12] But they are packed into a few places (Figure 4). In the Lisbon parish of Santa Maria Maior, which covers the Baixa, Alfama and Mouraria, there are 41 registered tourist units for every 100 dwellings; in Porto’s historic centre, 26; in Albufeira, 23. In the municipality of Lisbon as a whole the figure is under 4, and in Braga, Sintra or Coimbra under 1.

Fig. 4 — Short-term rental units active in the national register (RNAL) on 29 September 2026, as a percentage of family dwellings in the 2021 Census, selected parishes, municipalities and regions of the mainland. Units include rooms and hostels (8 per cent of the total). Porto historic centre is the union of the parishes of Cedofeita, Santo Ildefonso, Sé, Miragaia, São Nicolau and Vitória. Data: Turismo de Portugal, RNAL open data; INE, Census 2021; author’s calculation.

The studies agree on direction and disagree on size. Across municipalities in 2012–2016, one extra percentage point of the housing stock on Airbnb raised prices by about 3.7 per cent, and by early 2016 prices in the most touristic parishes of Lisbon and Porto had risen about 32 per cent more than in other parishes.[13] When Lisbon froze new registrations in its most saturated neighbourhoods in 2018, prices there fell by about 8 per cent relative to comparable areas, and by 20 per cent for two-bedroom flats.[14] The Banco de Portugal’s own estimates find the effects “significant, but” explaining “a minority fraction” of price growth nationally.[2] Both findings hold. In Alfama the tourist flat changed who could live there. In the country as a whole it moved the average only a little.

Tourism itself grew enormously: guest nights in Portugal rose from 50 million in 2013 to 89 million in 2025.[15] The pressure is on hotels as much as on homes, and it is concentrated where the tourists go.

The residents

More households, not more homes

The largest source of demand was not foreign money but people living in Portugal. The resident population, which had been shrinking, grew by 883,000 between 2013 and 2025. All of that increase came from migration: more people have died than been born in Portugal every year since 2009, while net migration turned from minus 36,000 in 2013 to large inflows; the Banco de Portugal estimates it averaged 127,000 a year in 2021–2024, against 10,000 a year from 1981 to 2021.[16][17] Households also got smaller, from an average of 2.6 people in 2013 to 2.4 in 2025, so the same people need more homes.[16]

The Banco de Portugal estimates the yearly increase in households from its own population figures, which count recent migration more fully than the official ones. Between 2014 and 2025 the number of households grew by about 495,000; the country completed 188,000 new homes (Figure 5).[2] The bank puts the shortfall of new building over the last decade at about 300,000 homes, or about 120,000 on the official population figures, and finds that it stopped growing only in 2025, when immigration slowed and building picked up.[2] An earlier study by the same bank found that between 2021 and 2024 migration added about 52,000 households a year, while the natural balance subtracted 15,000; the housing stock grew by 22,000 a year.[17]

Fig. 5 — Yearly change in the number of households, Banco de Portugal estimate (its own population figures, with Social Security data on migration from 2016 and household size held constant after 2020), and dwellings completed in new residential buildings, Portugal, thousands, 2000–2025. Data: Banco de Portugal, Boletim Económico, June 2026, chart data; INE.

Set the foreign buyers against this. Buyers domiciled abroad bought 8,000 to 11,000 homes a year from 2020 to 2025. More than 40 per cent of them were in the Algarve and Greater Lisbon, and a fifth were Portuguese emigrants. Even counting every one of them as a home taken from a resident, they would amount to a third to two-fifths of the yearly gap between new households and new homes, which averaged about 25,000 a year on the bank’s figures. On the official population figures, which the bank thinks undercount migration, the gap is smaller and the foreign share of it larger. The comparison is an illustration, not an estimate of cause, but it shows the scale. The foreign buyer made the market tighter, and not trivially. Most of the shortage would have been there without them.

Between 2014 and 2025 Portugal gained about 495,000 households and built 188,000 homes.Banco de Portugal, Boletim Económico, June 2026; INE

The money

Credit followed

The first Portuguese housing boom, in the 1990s and 2000s, ran on credit. This one mostly did not. New mortgage lending, in real terms, fell from €27 billion in 2007 to under €3 billion in 2013, and did not return to its 2007 level until 2025 (Figure 6). The stock of mortgage debt fell from 87 per cent of household disposable income in 2013 to 53 per cent in 2025.[18] Prices rose 86 per cent between 2019 and 2025; the stock of mortgage loans rose 22 per cent, and the Banco de Portugal finds no link across municipalities between how fast prices rose and how much buyers borrowed. The IMF reached the same conclusion: the role of credit in the doubling of prices “appears limited”.[2][9]

Fig. 6 — New loans to households for house purchase, billion euros at 2025 prices (HICP-deflated; the 2023 and 2024 totals include renegotiated loans, which were unusually large as rates rose), and outstanding mortgage loans as a percentage of household gross disposable income, Portugal, 2003–2025. Data: ECB, MFI interest rate and balance-sheet statistics; Eurostat; author’s calculation.

Low interest rates still mattered: they lowered the cost of owning compared with other investments, and a home was, for a decade, the best-paying asset most Portuguese families could own. The bank estimates the return from house prices alone at 8.8 per cent a year from 2015 to 2024, against 5.4 per cent for shares and under 1 per cent for deposits.[17] Credit is also returning now. New lending in 2025, including renegotiations, was back above its 2007 level in real terms, and a quarter of it came with the State guarantee for young buyers that The Rent discussed, at an average loan-to-value of 99 per cent.[18] The boom did not start with credit, but credit is now part of it.

The builders

Why the supply did not answer

High prices should call forth building, and in the end they have: permits for new homes reached 41,900 in 2025, the most since 2008, and completions have risen every year since 2015.[19] But the response was slow and remains small, and the reasons are on the supply side. The crisis destroyed the building industry: employment in construction fell from 579,000 in 2000 to 286,000 in 2013, and in 2025 it was 410,000. About a third of construction employees are now foreign, up from 3 per cent in 2013; the immigrants who add to demand for homes are also building them.[19] About a quarter of construction firms report a shortage of labour.[2]

Then there is permission. A building permit took about 545 days in Lisbon in 2023, 453 in Porto and 548 in Coimbra; a survey of architects found that nine in ten licensing processes in the Lisbon region missed their legal deadlines. Portugal licensed 17 new homes per 1,000 inhabitants between 2013 and 2022, against 34 in Germany and 60 in France.[20][17] A Banco de Portugal model of the market, which treats Portuguese supply as less responsive to prices than Spanish, finds the rise “driven by demand forces, with supply being unable to counterbalance”.[21] Since 2024 licences have fixed deadlines with tacit approval, the separate occupancy permit is gone, and a new land law lets rural land be reclassified for building if at least 70 per cent of the homes are public or affordable.[20] And, as The Rent noted, 12 per cent of the existing stock was vacant in 2021 and 19 per cent used as second homes: part of the shortage is of homes that exist but are not lived in.

The balance

Who bid the price up

Put the suspects in order of size. Nationally, the largest force was the growth in households, driven by immigration and smaller families, meeting a building industry that had shrunk by half and a licensing system that moves slowly. Foreign buyers, a tenth of the money in the market, added to that pressure and set the price in a few places: the Algarve, Madeira and the historic centres, where they, the golden visa and the tourist flat together changed who could afford to live. Funds came late and are still a small part of the housing market. Credit followed prices more than it led them, though it has begun to lead again.

Each of the popular explanations is true somewhere. None of them is the main explanation for the country as a whole. That matters for policy. Closing the golden visa, taxing and freezing tourist flats and taxing foreign buyers can relieve the places where those buyers concentrate, and the Lisbon freeze shows it can lower prices there. They cannot close a gap of a few hundred thousand homes, because most of that gap is made of people who live in Portugal and need somewhere to live. The remedy the evidence points to is the least popular one to argue about and the slowest to deliver: more homes, built faster, where the jobs are.

On method and tools

This piece was written collaboratively with Claude Opus 5.5 (Anthropic): human specification, editorial direction and critical review; machine data research, analysis and drafting. The figures and derived numbers are computed by scripts/housing_causes.py from the national statistics office’s house price releases, which classify buyers by tax domicile and sector, the Banco de Portugal’s balance-of-payments and investment-fund statistics, the SEF and AIMA golden-visa statistics, the national register of short-term rentals set against the 2021 Census, Eurostat, the ECB and the Banco de Portugal’s June 2026 study of the housing market. The statistics office’s website was unreachable for most of the day the data were collected, so its figures come from its published releases or from series republished by the Banco de Portugal and Eurostat, and the 2025 totals for buyers by domicile are as reported in the press and not yet checked against the release. The comparison of foreign purchases with the housing shortfall is an illustration of scale, not a causal estimate; no study we could find apportions the national rise in prices between its causes. The downloaded sources, with a table or page reference for every number, are kept with the script’s data; results are in docs/housing-causes-results.json and the figures in docs/housing-causes-figures.html.

The cover photograph is Alfama Rooftops and Tagus River View, Lisbon by Dale Cruse; CC BY 4.0, via Wikimedia Commons, cropped.

Authored by: Luis Matos Ferreira — Physicist, Developer, Writer

Related essays on this blog

1. The Rent — housing and work as a transfer between generations.
2. The Inheritance — public debt, public capital and pensions.
3. The Two-Thirds Country — Portugal’s productivity, hours, wages and housing.

Sources

1. OECD, Analytical house price indicators (real house price index), retrieved September 2026; Eurostat, household sector accounts (nasa_10_nf_tr), construction cost index for new residential buildings (sts_copi_a), HICP (prc_hicp_aind) and population (demo_gind); author’s calculation.
2. Banco de Portugal, Boletim Económico, June 2026, “Habitação em Portugal: determinantes da oferta e dinâmica de preços e rendas”, pp. 59–86 (printed), and chart-data annex.
3. INE, Estatísticas de Preços da Habitação, 4th quarter 2023 (22 March 2024), pp. 1, 4–5, 9–14; 4th quarter 2024, pp. 4–5, 9–17 (Figures 4–16); 1st quarter 2026, Figure 3. The 2025 totals (169,812 transactions, €41.2 billion; €3.4 billion by buyers domiciled abroad) are as reported by RTP from the 4th-quarter 2025 release.
4. INE, Preços da habitação ao nível local, 1.º trimestre de 2026, pp. 4–5.
5. Banco de Portugal, Relatório de Estabilidade Financeira, May 2026, Box 6, p. 94.
6. Banco de Portugal, Relatório de Estabilidade Financeira, May 2024, p. 25.
7. Banco de Portugal, BPstat, direct investment in Portugal, real estate investment by non-residents (series 12565842, and by investor country), 2008–2025; author’s annual sums.
8. SEF, Autorização de Residência para Investimento, annual and cumulative statistical maps, October 2012–September 2023; AIMA, Relatório de Migrações e Asilo 2024 and 2025; Lei n.º 56/2023, de 6 de Outubro, arts. 42, 43 and 55.
9. International Monetary Fund, Portugal: 2024 Article IV Consultation, Country Report 24/308, p. 15 and Annex II.
10. J. Pereira dos Santos and K. Strohmaier, golden visas and house prices in Portugal, IZA Discussion Paper 16857, 2024.
11. Banco de Portugal, BPstat, real estate investment funds, non-financial assets (series 12520313); share of housing in fund portfolios as reported by ECO, 13 February 2024, citing CMVM.
12. Turismo de Portugal, Registo Nacional de Alojamento Local, open data, active units on 29 September 2026; INE, Census 2021, family dwellings by parish; author’s calculation.
13. S. F. Franco and C. D. Santos, “The impact of Airbnb on residential property values and rents: Evidence from Portugal”, Regional Science and Urban Economics 88 (2021), 103667, doi:10.1016/j.regsciurbeco.2021.103667.
14. D. Gonçalves, S. Peralta and J. Pereira dos Santos, “Short-Term Rental Bans and Housing Prices: Quasi-Experimental Evidence from Lisbon”, IZA Discussion Paper 15706, 2022, pp. 3 and 16.
15. Eurostat, nights spent at tourist accommodation establishments (tour_occ_nin2), Portugal.
16. Eurostat, population change (demo_gind) and average household size (ilc_lvph01), Portugal.
17. Banco de Portugal, Boletim Económico, December 2025, D. Costa, C. Santos and R. Soares, “Mercado da habitação em Portugal: uma quantificação das pressões demográficas”, pp. 38–50 (printed).
18. European Central Bank, MFI interest rate statistics (new loans for house purchase) and balance-sheet statistics (outstanding loans), Portugal; Banco de Portugal, Relatório de Estabilidade Financeira, May 2026, pp. 28 and 67.
19. INE, building permits and completions, via Banco de Portugal, Boletim Económico, June 2026, chart-data annex; Eurostat, employment by industry (nama_10_a10_e).
20. OECD, OECD Economic Surveys: Portugal 2026, pp. 115–116 (printed); Banco de Portugal, Relatório de Estabilidade Financeira, November 2024, p. 31.
21. R. Lourenço, A. Moura and P. Rodrigues, Banco de Portugal, Revista de Estudos Económicos X(4), October 2024.