Portugal has become a hotspot for the global middle class, driving property prices beyond what local wages can support, according to economist José Manuel Félix Ribeiro.
“The high cost of homes is the result of putting Portuguese land on the international market,” he told Lusa. He is one of the authors of Three Centuries of Portuguese Economy (Guerra e Paz).
Félix Ribeiro explains that the “land complex” – covering construction, real estate, and tourism – now dominates Portugal’s economy. Even construction, once focused on the domestic market, increasingly caters to international buyers.
As a result, land and property values have soared. “This explains the rise in housing prices: land has become more valuable through internationalisation,” he said. Meanwhile, local wages have not kept pace, leaving many homes unaffordable for Portuguese residents.
The National Institute of Statistics (INE) reports that the average house price in Portugal rose 16.6% year-on-year in Q3 2025, reaching €2,111 per square metre. This trend is especially visible in sought-after regions such as the Algarve, Lisbon, and Porto, making Portugal property for sale increasingly attractive to foreign buyers.
Félix Ribeiro notes that closing the gap between wages and housing costs will be difficult without state intervention, potentially including Social Security capitalisation to support housing. He also points out that the financial system, rather than wages, is the main obstacle to economic growth, as it heavily focuses on financing land and property rather than broader productive investment.
For those considering buying a home in Portugal, this international demand underscores the appeal – and competition – in the current property market. Whether you’re looking for a luxury villa in the Algarve or a city apartment in Lisbon, understanding these market dynamics is crucial for making informed investments.
José Manuel Félix Ribeiro, 78, is a university professor and consultant to the Calouste Gulbenkian Foundation, with decades of experience in economic planning and policy.