Portugal posts world’s biggest home price gain as global market cools

Portugal’s real house prices jumped 15.2% in the first quarter of 2026, the biggest increase among 57 economies tracked by the Bank for International Settlements. The surge underscores a widening supply shortage, strong foreign demand and a luxury segment that continues to outpace broader global housing trends.

Why it matters: - Portugal’s housing market is moving in the opposite direction from the rest of the world. - The gain points to a deeper supply crunch in a market already being pushed by foreign capital and high-end demand. - The trend matters for buyers, developers and policymakers because it signals continued pressure on prices, especially in premium areas.

What happened: - Portugal’s real house prices rose 15.2% year on year in the first quarter of 2026, the largest increase in the Bank for International Settlements study covering 57 economies. - Global real house prices fell 1.2% at the start of 2026. - That was a steeper decline than the 0.5% fall recorded at the end of 2025. - North Macedonia posted the second-highest rise at 12.5%. - Bulgaria followed at 10.8%. - The eurozone recorded 2.6% growth over the same period.

The details: - The Bank for International Settlements said the price surge reflects a persistent gap between housing demand and supply. - Portugal cut VAT on construction to 6%. - Portugal also simplified planning permissions under a revised framework known as RJUE. - The Bank for International Settlements said the policy changes would not have a short-term impact. - Property Market-Index said new-build completions averaged about 21,000 homes a year between 2020 and 2024. - That compares with roughly 104,000 homes a year in the early 2000s. - Total real estate investment volume in Portugal rose 51% in 2024, according to Property Market-Index. - Foreign investors accounted for 81% of that investment volume. - Portugal attracted €13.2 billion in foreign direct investment in 2024. - Of that total, €3.5 billion went into real estate. - Property Market-Index said luxury new-build property is one of the market’s fastest-growing segments. - The firm’s luxury-weighted national growth rate stood at 12% in 2025. - Tróia and Comporta each recorded 18% growth in 2025. - Both hotspots are forecast to add another 9% by the end of 2026. - In Lisbon’s Avenida da Liberdade area, new-build luxury prices have reached up to €12,000 per square metre.

Between the lines: - The data suggests Portugal is benefiting from a mismatch that has lasted long enough to keep price growth ahead of broader Europe. - International buyers are concentrating demand in a market with limited new supply, especially at the luxury end. - The strongest gains are clustered in a handful of hotspots, which points to a market that is less broad-based than it looks at first glance. - Property Market-Index said Portugal’s property market is defying the global trend because the fundamentals are structurally different. - Amanda Collinson, spokesperson for Property Market-Index, said demand from international buyers, particularly for luxury new homes, continues to outstrip limited supply.

What’s next: - Property Market-Index forecasts growth in Portugal’s leading hotspots will remain more than double the rate expected across the EU, UK and North America until at least 2027. - The market will likely stay sensitive to how quickly new supply can come online and whether recent policy changes begin to ease the shortage.

The bottom line: - Portugal is now one of the clearest exceptions in global housing, with demand and limited supply keeping prices rising even as much of the world cools.