Portugal Property Market 2026: Prices Accelerating, Sales Falling, and a New Tax on Non-Resident Buyers

The policy environment has also changed. Since May 25, 2026, the law has generally charged non-residents buying urban residential property a flat 7.5% property transfer tax, known as IMT, without the usual bracket relief. The latest official transaction data predates that change, so its effect on demand cannot yet be measured. This report keeps the existing market evidence separate from what remains unknown.

Everything here was verified against primary sources on August 14, 2026. Euro figures carry dollar equivalents at the ECB reference rate of US$1.1534 per euro (August 13, 2026); euro amounts govern.

Method note: completed sales, mortgage valuations, and asking prices use different methods and measure different parts of the market. Each series is labeled rather than combined.

How quickly are Portuguese property prices rising?

Portugal publishes two price series that measure different parts of the market and should not be combined.

The first is INE’s transacted-price series, which is built from completed sales. It puts the national median at €2,337/m² in the first quarter of 2026, up 19.8% year over year. For 2025 as a whole, the median was €2,076/m² (about US$2,400), up 16.8%.

On full-year 2025 data, Grande Lisboa had the highest regional median at €3,439/m² (about US$3,970), followed by the Algarve at €3,139, the Setúbal peninsula at €2,596, Madeira at €2,500, and metropolitan Porto at €2,305. Among large municipalities, Lisbon transacted at €5,292/m² (about US$6,100), Cascais at €5,000, and Oeiras at €4,511. Eleven of the 24 largest municipalities recorded faster growth in the quarter, with the largest change in Funchal.

A second source is INE’s bank-valuation survey, a monthly series of mortgage appraisals rather than completed sales. It reached €2,228/m² in June 2026, up 16.6% year over year, slightly slower than May’s 17.1% increase.

The sales series accelerated while the valuation series decelerated slightly. This is not necessarily a contradiction: one measures completed transactions and the other mortgage appraisals. The difference should be monitored rather than forced into a single figure.

How quickly are Portuguese rents rising?

The most authoritative national figure available is annual and covers newly signed leases. In 2025, Portugal recorded 149,628 new family-dwelling leases, up 5.4%, at a median contracted rent of €9.29/m² per month (about US$10.70), up 9.7% year over year.

The city table later in this report uses asking rents from one portal on a single date. Asking rents and contracted rents measure different things, so the figures are labeled and should not be compared as though they were interchangeable.

Are foreign buyers paying more than domestic buyers?

Yes, in the two metropolitan areas for which INE published the comparison. In Grande Lisboa, buyers with a foreign tax domicile paid a median price 34.5% higher per square meter than domestic-domiciled buyers. In metropolitan Porto, the difference was 16.9%.

The figures do not prove that two comparable homes sold at different prices because of the buyer’s nationality. They are also consistent with foreign demand concentrating in central, renovated, or turnkey property that already commands a higher price per square meter.

No nationwide official count of non-resident purchases is available in the cited releases, so no national share is estimated here.

Prices rose 19.8% while sales volume fell 10.5%. This can indicate growing affordability pressure or a change in the mix of properties sold, but the release does not by itself establish a single cause. The divergence began before the new tax took effect.

Is new housing supply catching up with demand?

Licensing reached its highest level since 2011, with 48,844 dwelling units approved in 2025, up 14.6%. Completions increased more slowly to 30,425 units, up 8.7%, while the number of completed buildings fell by 3%. This suggests a shift toward larger projects as well as a gap between approvals and finished homes.

The cost of new housing construction rose 7.2% year over year in June, with materials up 6.5% and labor up 8.0%. Rising costs can delay projects or lead developers to revise prices and specifications.

The 2025 data shows that more homes may reach the market, but too few have been completed to say that the current shortage has eased.

What is happening to mortgage rates and monthly payments?

INE’s implicit rate across the stock of existing mortgages reached 3.101% in June. Banco de Portugal’s rate on new lending was 2.93%, the fifth-lowest in the euro area compared with a 3.48% average. Mixed rates accounted for 85% of new mortgages.

The average monthly installment on the loan stock reached a record €436 (about US$503) on the central bank’s measure, its tenth consecutive monthly increase. INE’s separate series reported €411; the difference reflects the institutions’ distinct methodologies.

The central bank’s May 2026 Financial Stability Report states that a correction in residential prices remains a major risk to Portugal’s financial system. It also identifies supply shortages, government measures, and significant foreign-buyer participation as demand and price factors.

Buyers should weigh the recent pace of price growth against the central bank’s explicit correction-risk warning.

Which property rules changed in 2026?

The non-resident transfer tax. Since May 25, 2026, many non-resident buyers have paid a flat 7.5% property transfer tax on urban homes, without the ordinary exemption or lower-rate brackets. Relief may be available to someone who was already a Portuguese tax resident, becomes tax-resident within two years and claims a refund, or places the property into a qualifying capped-rent tenancy within six months and keeps it rented for at least 36 of the first 60 months.

The scale: on a €200,000 (about US$231,000) second home, the ordinary brackets produce roughly €4,605 (about US$5,300) of IMT; the non-resident rate produces €15,000 (about US$17,300), more than three times as much. There is no grandfathering for promissory contracts signed before the effective date, because the tax is assessed at the deed.

The calculation, exceptions, refunds and timing issue for buyers already under contract are covered in can Americans buy property in Portugal.

The short-term-rental reversal. The national freeze on new short-term-rental registrations introduced in 2023, along with its reassessment rules and special tax, was repealed in late 2024. Many published guides still describe the old national rules. Municipalities may impose their own current restrictions, so check the exact address. Our Portugal buying pitfalls guide explains the other ownership checks.

The tax’s effect cannot yet be measured from official transaction data. The newest release covers January through March 2026, almost two months before the rule took effect. INE’s next quarterly report, expected around mid-October 2026, will be the first release capable of showing an initial post-change pattern. Even then, separating the tax effect from interest rates, supply, and seasonality will require care.

How do Lisbon, Porto, Faro, Caldas da Rainha, and Funchal compare?

The comparison uses idealista.pt’s published averages for the full result set in each municipality, collected on August 14, 2026. The final column divides annualised asking rent by asking sale price. It is a screening ratio rather than a net yield and excludes vacancy, tax, management, purchase costs, and any difference between asking and agreed prices.

The rough rent-to-price ratio falls within a narrow 5.0% to 6.0% range across all five places. Given the limits of asking-price data, the difference is too small to rank the locations confidently by rental return.

The clearer difference is entry price. On the same day’s asking data, Lisbon was 2.9 times as expensive per square meter as Caldas da Rainha, with Porto, Faro, and Funchal in between.

Three rental samples contain fewer than 210 listings and are therefore sensitive to the mix of properties available. Some short-stay listings may also be included. Lisbon’s asking average of €6,795/m² is well above INE’s transacted median of €5,292/m² for the municipality, which is a useful reminder that asking and completed-sale data are not equivalent.

Can a property purchase still qualify for Portugal’s Golden Visa?

Portugal’s Golden Visa has had no real-estate route since October 2023. What survives is a fund-based program with its own distinct risks and its own article, Portugal Golden Visa investment funds. Buying a Portuguese home is a housing decision, not an immigration strategy.

Is 2026 a good time to buy property in Portugal?

The answer depends on the specific property, how long you plan to own it and whether the new non-resident tax applies to you. Through the first quarter, the data shows rapid price growth, more homes approved for construction and persistent foreign demand. The reasons for caution are the central bank’s warning about a possible price correction, record mortgage payments, higher construction costs and fewer completed sales even before the new tax took effect.

For an individual buyer, four checks are more useful than a short-term price forecast:

1. Confirm your property transfer-tax rate and whether you qualify for an exemption or later refund before setting the budget.
2. Use asking data to screen locations and completed-transaction data to understand the wider market.
3. Verify local short-term-rental rules if income is part of the plan.
4. Watch the mid-October release, which is the first evidence of the market Portugal’s new tax actually created.

Buy only when the particular property, total cost, and intended use still make sense without relying on continued double-digit price growth.

When you are ready to compare locations, our Portugal destination guide covers the regions and developments from builders that have passed our review. DSH is an education and referral platform. Your lawyer and tax adviser should apply the current rules and costs to the specific purchase.

Disclaimer

Dream Second Home is not an investment adviser, law firm, or tax advisory, and this article is not investment, legal, or tax advice. It is an educational market report verified on August 14, 2026. Asking prices are identified as such, and figures based on completed sales are kept separate from mortgage valuations and listings. No transaction data covering the period after May 25 was available, so the effect of the new tax remains unknown until a later release. Have licensed Portuguese professionals review the figures and assumptions for any purchase you are considering.