The Bank for International Settlements reported that real house prices worldwide dropped by 1.2% in the first quarter of the year, a steeper fall than the 0.5% drop seen at the end of 2025.

Against that backdrop, Portugal's real house prices climbed by 15.2% year on year, the biggest increase of the 57 economies covered in the BIS study. North Macedonia came next at 12.5%, followed by Bulgaria at 10.8%. By comparison, the eurozone as a whole managed growth of just 2.6%.

The BIS attributes Portugal's rise to a persistent gap between housing demand and supply. In response, the Portuguese government has cut VAT on construction to 6% and streamlined planning permissions through a revised legal framework known as RJUE, though the BIS is clear that neither measure will change the picture in the short term.

Property Market-Index has published its own research examining why Portugal's market continues to defy the global slowdown. It points first to a structural shortage of new homes, with completions averaging only around 21,000 a year between 2020 and 2024, well below the roughly 104,000 homes built annually in the early 2000s.

Foreign capital is filling much of the gap. Property Market-Index found that total real estate investment volume in Portugal rose by 51% in 2024, with foreign investors responsible for 81% of that figure. The country also drew €13.2 billion in foreign direct investment that year, and €3.5 billion of that went directly into real estate.

Credits: Supplied Image; Author: Portugal Pathways; Portugal’s luxury new homes market is seeing record levels of demand in 2026

Within the market, luxury new-build property stands out as one of the fastest-growing segments. Property Market-Index's luxury-weighted national growth rate reached 12% in 2025, but several individual hotspots outpaced that considerably.

Tróia and Comporta were the strongest performers, each posting 18% growth in 2025 with a further 9% forecast by the end of 2026. In Lisbon, new-build luxury prices in the Avenida da Liberdade area have climbed as high as €12,000 per square metre.

"Portugal's property market is defying the global trend because the fundamentals here are structurally different," said Amanda Collinson, spokesperson for Property Market-Index. "Demand from international buyers, particularly for luxury new homes, continues to outstrip a limited supply."

Looking ahead, Property Market-Index expects growth across Portugal's leading hotspots to run at more than double the rate forecast for the EU, UK and North America, a trend it expects to hold until at least 2027.

To find out how you can invest in Portugal's luxury new homes market and gain access to exclusive off-plan and off-market developments, arrange a free discovery call with Portugal Pathways.