Portugal: House Prices Soar While Transactions Decline

House prices surged by 8.7% in the second quarter of 2023, maintaining the same growth rate as the previous quarter. Existing dwellings saw a higher price increase at 9.0%, while new dwellings increased by 8.0%. Compared to the previous quarter, the House Price Index (HPI) rose by 3.1%, with existing dwellings increasing by 3.2% and new dwellings by 2.8%.

According to the latest revision of the Housing Price Index by Portugal’s National Statistics Institute (INE) between April and June 2023, there were 33,624 dwelling transactions worth 6.9 billion euros, marking a decrease of 22.9% and 16.7%, respectively, compared to the same period the previous year. Households acquired 28,732 dwellings (85.5% of the total) for a total of 5.8 billion euros (83.8% of the total). Transactions by buyers residing outside the National Territory totaled 2,535 units (7.5% of the total), showing an 8.9% decrease year-on-year.

House Price Index

In Q2 2023, the HPI had a year-on-year change rate of 8.7%, maintaining the previous quarter's growth. Existing dwellings increased by 9.0%, down by 0.7 percentage points compared to the previous quarter, while new dwellings increased by 8.0% (compared to 5.7% in Q1 2023). The HPI increased by 3.1% between the first and second quarters of 2023 (compared to 1.3% in Q1 2023 and 3.1% in Q2 2022).

Number and value of House Transactions

Between April and June 2023, 33,624 dwellings were transacted, reflecting a year-on-year reduction of 22.9% (compared to -20.8% in Q1 2023). This marked the fourth consecutive quarter with a decrease in the number of transactions. Existing dwellings accounted for most of the transactions (79.7%), totaling 26,799 units, a 25.0% drop compared to the same period in 2022. New dwellings had 6,825 transactions, a 13.2% decrease year-on-year.

Property values kept ascending during the second quarter, following three consecutive quarters of slowing growth.

The number of transactions decreased by 2.5% between Q1 and Q2 2023 (-10.5% in the previous quarter). In this period, the reduction in transactions was more pronounced for existing dwellings (-2.6%) compared to new dwellings (-2.1%). The total value of transactions in Q2 2023 was approximately 6.9 billion euros, a 16.7% decrease compared to the same period in 2022.

In Q2 2023, 28,732 dwellings were purchased by households (85.5% of the total), reflecting an increase of 0.6 percentage points from the previous quarter. Sales of dwellings to households showed a 24.7% year-on-year decrease and a quarter-on-quarter change rate of -1.9%. These transactions amounted to 5.8 billion euros (83.8% of the total), marking the lowest percentage since Q1 2020.

Between April and June 2023, 31,089 dwellings were sold to buyers residing within the National Territory, marking a year-on-year decrease of 23.8% and a 2.8% reduction from the previous quarter. Transactions involving buyers with tax residence outside the National Territory decreased by 8.9% to 2,535 units, representing 7.5% of the total, the highest percentage in the series starting in Q1 2019. Transactions from buyers residing outside the National Territory exhibited different trends between the two categories analyzed. Purchases from buyers with tax residence in the European Union decreased by 24.5% to 1,174 units, while the Remaining Countries category saw a 10.8% increase in transactions, totalling 1,361 dwellings.

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