The EU has dropped a major bombshell, suggesting Portugal’s property prices are overvalued by up to 35%! That’s a huge number!
Is the Portuguese real Estate Bubble about to burst?
To answer that, we need context.
Until recently, Portugal was seen as a poor European country, and when the 2008 crisis hit, prices were at their lowest. At the same time, people started travelling more, seeking places with a better quality of life! And when the government introduced the NHR and Golden Visa programs, it created the perfect environment.
Suddenly, international buyers realised the country’s potential—amazing climate, safety, low cost of living, and a population fluent in English! Portugal went from the ‘ugly duckling’ to Europe’s new Shining Gem! This wasn’t speculative hype; it was fundamental value finally being recognised!
That surge in demand has driven average prices up by about 10% a year over the last decade!
But here is the crucial difference between a bubble and what we’re experiencing: Supply!
After 2008, construction almost stopped! Many builders went bankrupt, and banks seized assets. For years, Portugal was building fewer than 25,000 new homes per year—that’s critically low! When you have massive, sustained demand, but almost no new homes being built—prices have to go up! It’s basic economics!
So, are we now in a bubble? I believe not!
- Portugal is simply catching up with the rest of Europe after years of being undervalued.
- The actual average price of €4500/m² in the Algarve is still reasonable compared to other major European tourist hubs! (Split -€5500m², Nice -€7500m², Marbella – €9000m², Capri – €9500m² )
- International interest remains incredibly strong even after the recent adjustment to NHR and Golden Visa, because the real driver is the lifestyle.
- On the supply side, the government is working hard to simplify bureaucracy and boost construction, but that takes time.
What does this mean for the future?
- We won’t see another 10 years of 10% increases.
- My prediction is that the market will slowly ease out of this high-pressure environment, moving toward steady, healthy growth without the massive price drops of a bursting bubble!
If you’re waiting for a 35% drop to invest in Portugal, you might be disappointed.
Yet, more than ever, it’s essential to focus on high-quality, fully legal homes. Those that will sustain small market dips and always be attractive for those seeking for the sunny lifestyle of the Algarve
My name is Steve Marqué, I’m a Real Estate Agent in Lagos & Western Algarve with more than 20 years of industry experience.
Let me know your thoughts in the comments, and feel free to reach out if you have any questions. See you soon!
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