House supply is affected by the high cost of capital. That’s transitory, for sure. Inflation is consistently subsiding so high interest rates will follow. What’s not so transitory is the labor shortage. That´s a chronic problem without a solution in sight, hindering the supply of new homes, which grew a meager 1.9% in the last 10 years. 

Conversely, demand is skyrocketing, strongly pushed by the influx of foreigners wanting to move to Portugal. They already take 7% of the residential market and the numbers are steadily growing with no signs of decelerating. 

Consequently, while most European property markets downturn, the Portuguese see prices rise 9% YoY in the second quarter of 2023 as a national average, after a 7.6% YoY rise in the first, as reported by the National Statistics Bureau (INE) last week. 

In coastal cities where demand is much higher than in the rest of the territory, the rise is even steeper – Lisbon, 12.9%; Cascais, 12%; Porto, 13%.