Record Increase in Portuguese Home Values

LISBON (Reuters) – The value of Portuguese homes that changed hands in the third quarter rose 28% to a record 9.05 billion euros ($1.04 billion), potentially aggravating a shortage of affordable housing, as interest rates in Europe retreated from all-time highs.

The National Statistics Institute reported that almost 41,000 homes were sold in the quarter, up 19.4% year-on-year, with prices for existing dwellings rising more than for new ones.

In the first nine months of the year, the value of homes sold increased 13.5% from the same time last year to 23.7 billion euros, slightly below 2022's record of 24.4 billion.

The country's ongoing shortage of affordable housing has been worsened by wealthy foreigners attracted by residency rights linked to property investment and state tax breaks.

A tourism boom has also led to a surge in short-term holiday rentals, worsening the housing market squeeze. This situation has prompted protests in Lisbon and other cities by locals struggling to afford housing.

Prices were highest in the densely populated Lisbon metropolitan area and the wealthier northern regions of the country, according to the data released on Monday.

Tax residents in Portugal accounted for 93.5% of property deals, followed by other EU citizens at 3.37% and non-EU citizens at 3.13%.

> ($1 = 0.9618 euros)