The first half of 2023 brought notable shifts in Portugal’s residential property market, with a 19% decrease in transactions compared to the same period in 2022. In this comprehensive analysis, we explore the factors behind this decline and examine regional trends that shed light on the evolving landscape of Portugal’s real estate market.

During the initial six months of 2023, the total number of residential property transactions in mainland Portugal dwindled from 82,752 in H1 2022 to 66,624 in H1 2023. This marked a substantial 19% drop in property deals. Lisbon, Portugal’s vibrant capital, dominated the transaction scene, accounting for 4,387 properties sold. However, this represented a notable 27% decrease compared to H1 2022 when 5,963 homes were sold.

Miguel Lacerda, Lisbon Residential Director, weighs in on these figures, asserting that they do not come as a surprise. He emphasizes that the market is currently characterized by cautious and contemplative potential buyers. Several factors have contributed to this mindset, including continuous increases in interest rates, stricter bank financing regulations, concerns about housing affordability, and shifts in demographics.

Nevertheless, Lacerda notes that high-end markets have displayed resilience and steady growth amid these challenging conditions. This observation underscores the dynamic nature of the Portuguese real estate sector.

Porto, Portugal’s second-largest city, also witnessed a 19% decrease in residential property transactions during the first half of 2023 compared to the same period in 2022. João Leite de Castro, Commercial Director of Savills Porto Division, expressed that these numbers were anticipated. However, he highlights Porto’s remarkable resilience as a preferred destination for individuals and companies seeking to reside and work in the city.

Leite de Castro attributes this resilience to the significant urban development Porto has undergone, which continues to make it an attractive choice for residents and businesses alike. This development hints at promising prospects for the regional property market.

The first half of 2023 also saw changes in the average sales prices for new properties across key regions in Portugal. In Greater Lisbon, the average price per square meter for new properties reached €5,847. Greater Porto followed closely with an average of €4,127 per square meter, while the Algarve region reported an average of €4,879 per square meter.

As the first half of 2023 unfolds, Portugal’s residential property market demonstrates resilience in the face of various challenges. While a decline in transactions is notable, factors such as shifting buyer sentiments, economic conditions, and regional dynamics all contribute to the evolving landscape. The real estate market remains dynamic, with opportunities for growth and adaptation on the horizon as buyers and sellers navigate a changing landscape.