Portugal's housing debate: construction costs up 7.5%, prices nearly triple

Costs climb as prices nearly triple

Statistics Portugal (INE) published figures on 9 October showing that construction costs for new housing were 7.5% higher in August 2026 than a year earlier. Materials rose 7.1% and labour rose 8%, pressure that weighs on the budgets and viability of new projects. The European Commission's 2026 country report, published in June, found that nominal house prices have almost tripled since 2015, an average annual increase of 11%. Portugal is among the European countries where the ratio of house prices to incomes has worsened most, with the strain concentrated in the Lisbon and Porto metropolitan areas, the Algarve, coastal zones and mid-sized municipalities. Regional imbalances complicate the picture, since some areas face demand that supply cannot meet while others hold surplus housing.

Overall construction costs7.5%

Materials7.1%

Labour8%

Overall construction costs

7.5 %

Materials

7.1 %

Labour

8 %

Data from the article text

Immigration, investment visas and tourism

Several Portuguese politicians, including minister Nuno Melo, have blamed the housing crisis on uncontrolled immigration. Opinion writers counter that this explanation skips structural factors built up over at least the last decade, among them tourism growth, expansion of short-term lodging, foreign retirees drawn by tax regimes and the concentration of economic activity in Lisbon and Porto. They accept that the growth of the foreign population has had a large effect on housing demand, but argue it cannot be the sole cause. The so-called golden visas, formally Autorizações de Residência para Investimento (ARI), allowed residence permits through property purchases until 2023, when the law was changed to drop real estate as an investment option. Official figures cited show 1,245 ARI issued in 2019 linked to 1,160 properties, 1,182 in 2020 linked to 1,094 properties, and 865 in 2021 linked to 756 properties. The AIMA report puts the 2023 total at 2,901 ARI, but no longer breaks down how many properties were bought.

20191,245

20201,182

2021865

20232,901

2019

1245 permits

2020

1182 permits

2021

865 permits

2023

2901 permits

Data from the article text

Supply, wages and the 2025 price surge

An opinion column contrasts the roughly 100,000 homes a year built at the start of the century with 26,000 in 2025, the best year since 2011, while the country took in more than a million new residents. The same column says rents rise about 10% a year, house prices 17% and wages 5%, and that more than 700,000 homes stand empty nationwide, 150,000 of them in the Lisbon region. Another opinion piece notes that the number of people working in construction has barely grown, even as the sector is being asked to build again. INE data show the housing price index rose 17.6% in 2025, with existing homes up 18.9% against 14.2% for new ones. Eurostat figures cited in a sociologists' statement show Portuguese house prices rose 180% between the fourth quarter of 2015 and the fourth quarter of 2025.

Sociologists and the role of policy

The Portuguese Sociological Association (APS), in a statement issued on 26 October, said the crisis is not inevitable because it results from political choices. It also rejected any repression of the right to demonstrate and asked public authorities to listen to the concerns citizens raise in public spaces. The association cited OECD data showing that between 2015 and 2023 house prices outpaced incomes in 27 of 33 countries with data, with Portugal among the three largest increases in the price-to-income ratio.

“The housing crisis exists and is here to stay.”

The APS argues that land values, construction costs and property brokerage shape prices, but that the problem also lies in how the housing stock is used, regulated and steered by public policy. It notes that only 69% of homes in Portugal are used as a permanent residence, falling to about 50% in the Algarve, which removes many dwellings from the local rental and purchase market.

Wages, construction costs and open questions

A SAPO opinion piece argues that the crisis is not explained only by low wages, material prices or bureaucracy, but by a mismatch between incomes, supply, location and buyers' capacity to invest. It challenges a developer's comparison of salaries, materials and construction costs over about twenty years, which concluded that buyers had become poorer rather than homes dearer. The piece accepts that prices rose and incomes did not keep pace, and notes that construction cost helps decide whether building pays without setting what a seller can ask. It also lists unanswered questions about the comparison, including whether the salary is gross or net, which profession and region it covers, and whether the quoted daily rate is a wage or a contract price.