Home Sales Stop Falling Then Rise Again, Prices Accelerate | Housing

After two years of declines in the number of home sales and the total amount of transactions in this sector, the market is growing again, and at an accelerated pace, with double-digit increases. This is at a time when prices are again rising more strongly, by an increase of nearly 8%, after slowing down at the beginning of this year.

The data was released on Friday by the National Institute of Statistics (INE), which reported that in the second quarter of this year, the housing price index registered a variation of 7.8% compared to the same period of the previous year. This is an acceleration compared to the 7% increase recorded in the previous quarter, thus breaking the slowdown trend that has been recorded since the middle of last year. This development is mainly due to the behavior of existing home sales prices, which rose by 8.3%, while new homes rose by 6.6%.

There is also a clear acceleration in the chain, and in the second quarter of this year, prices increased by 3.9% compared to the first three months of 2024, a much higher rate of variation than was recorded in the first quarter, when values ​​remained practically stagnant, with an increase of only 0.6%.

These values ​​are recorded in a period in which 37,125 homes were sold in Portugal, for an amount exceeding 7.8 billion euros, figures that represent increases of 10.4% and 14% respectively, compared to the second quarter of last year. This is the first time that increases have been recorded in these two indicators since mid-2022, putting an end to a market downturn that, however, was not enough to stop prices.

Thus, in the first half of the current year as a whole, 70,202 homes were sold in Portugal, for more than 14.6 billion euros, corresponding to annual increases of 3% and 6% respectively.

The average price per home, taking into account the number of sales and the total amount of transactions, was 212,000 euros, a new record in this INE statistical series, which dates back to 2009.

Lisbon represents a third of the market.

The market growth trend was across the country, with double-digit increases in almost all regions, except the Algarve, where house sales fell.

The Greater Lisbon area remained the main area in the Portuguese housing market, accounting for almost a third of the total value of transactions. In total, 7,031 homes were sold in this area during the second quarter, for more than €2.5 billion, equivalent to 32% of the national total.

Next is the North, where 10,995 homes were sold during the period under analysis, for more than €1.9 billion, which is equivalent to about 24% of the market.

In contrast to the movements recorded in the rest of the country, the number of sales fell by almost 4% in the Algarve, where 2,836 homes were transacted in the second quarter. However, the rise in prices was enough to lead to a 2.6% increase in the volume of transactions, which exceeded 912 million euros.

National buyers support growth

The increase in sales and the total amount of transactions was contributed, above all, by domestic buyers, who still represent the vast majority of the market, although foreign buyers have a significant weight in the increase in average house prices, due to the disparity in the amounts spent among them.

In the second quarter, buyers with tax domicile in Portugal were responsible for purchasing 34,661 homes, for a total amount of around 7 billion euros, values ​​that correspond to increases of 11.5% and 16% respectively, with respect to the second quarter of last year.

Buyers with a tax domicile abroad purchased 2,464 (6.6% of the market) for €870 million (11% of total transactions nationwide). These figures correspond to year-on-year decreases of 2.8% and 0.12% respectively.

However, foreigners continue to pay, on average, almost twice as much as nationals for a home. In the second quarter, buyers residing in Portugal paid an average of €202,000 for a home (below the overall average of €212,000), while foreigners paid more than €353,000.