Portugal’s housing market is experiencing a significant supply shortage, with available properties for sale declining 26% since the all-time high reached at the end of 2020, according to data analyzed by Idealista through the second quarter of 2025.
The reduction in available housing stock has occurred throughout the country, though with notable regional variations. Leiria and Coimbra recorded the steepest declines at 52% and 51% respectively, compared to peaks in the fourth quarter of 2018.
Major markets have seen substantial inventory reductions. Lisbon’s available housing stock has dropped 39% since late 2020, while Faro experienced a 38% decline from its summer 2020 peak. The islands have also been affected, with São Miguel seeing a 35% decrease since Q2 2021 and Madeira down 32% from early 2021.
Porto has seen supply fall 22% since Q2 2021, while Santarém dropped 31%, Setúbal declined 23%, and Aveiro decreased 21% from their respective peaks. Portalegre recorded the country’s most moderate decline at just 7%.
Portugal Property Market: What Buyers Need to Know
“The supply shortage is fundamentally changing how property transactions happen in Portugal,” explains Cristina Pereira, founder of Residential Advisory Portugal. “In markets like Lisbon and the Algarve, well-priced properties are receiving multiple offers within days. Buyers who aren’t prepared to move quickly or who lack local market knowledge are consistently being outbid.”
The dramatic inventory reduction reflects several converging factors: increased demand from international buyers, Portuguese nationals seeking homeownership, and limited new construction have combined to create intense competition for available properties.
“We’re advising clients to have financing pre-arranged and decision criteria clearly defined before beginning their search,” notes Cristina Pereira. “In this environment, the ability to act decisively when the right property appears is often more valuable than extensive deliberation. The properties that offer the best value move fastest.”
Portugal Real Estate Buyer Considerations
The supply shortage means that properties requiring renovation or those in less obvious locations may represent better opportunities than in a balanced market. With fewer move-in-ready options available, buyers willing to undertake improvements can access markets that might otherwise be out of reach.
The housing supply constraints show no signs of rapid resolution. New construction faces regulatory hurdles and labor shortages, while many existing property owners are holding rather than selling in anticipation of continued price appreciation.
For prospective buyers, the current market emphasizes the importance of expert guidance, market knowledge, and readiness to act when opportunities arise. Understanding local supply dynamics has become essential in Portugal’s competitive property landscape.
Navigating Portugal’s competitive property market requires local expertise and rapid response capabilities. Contact Residential Advisory Portugal for expert guidance on your property search.