Portugal’s property market is sending two signals at once, and they don’t agree with each other. Prices keep rising at a pace that would alarm most European housing ministers, yet the foreigners who used to be blamed for pushing them up are buying proportionally less than they were a year ago, and considerably less than three years ago.
What the Q1 2026 numbers actually show
Confidencial Imobiliário reported that 37,750 homes were sold in mainland Portugal in Q1 2026, down 9.4% from the previous quarter, confirming the weaker activity trend seen since the second half of 2025. That cooling in volume hasn’t touched price. INE’s national House Price Index for Q1 2026 showed prices continuing to rise, increasing by 17.8% year-on-year, while the number of housing transactions fell by 8.7%.
The more striking detail sits in the buyer breakdown. Purchases by buyers with tax residence outside Portugal declined for the third consecutive year, with EU-resident buyers acquiring 4,416 dwellings in 2025, down 9.6% year-on-year, while buyers resident in non-EU countries purchased 4,055 dwellings, down 17.1%. Set against a record 2025 in which 169,812 dwellings were sold nationwide, up 8.6% year-on-year and the highest figure in the available series, foreign buyers are shrinking as a share of a market that is itself getting bigger. Non-resident purchases are now doing more of the heavy lifting on average transaction value than on volume — a market where fewer international buyers are competing for the top end, while a much larger pool of domestic and resident buyers drives the bulk of activity.
Why the retreat, and why it matters for you
Commenting on the INE data, Idealista noted that policy changes may help explain the decline in non-resident purchases, including the end of the Golden Visa real estate route and the replacement of the Non-Habitual Resident regime with a more restrictive framework. Both changes are well documented on the official side: AIMA’s Golden Visa route no longer accepts direct real-estate investment (fund, research, cultural or job-creation routes remain), and NHR closed to new applicants on 31 March 2025, replaced by the narrower IFICI regime for qualifying professionals. Add in tighter mortgage conditions for non-residents — loan-to-value ratios well below what residents get — and a euro that has made Portuguese property costlier in dollar and sterling terms, and the retreat looks less like a loss of appetite and more like a rational response to a changed rulebook.
The construction sector is showing signs of recovery, particularly civil engineering, thanks to European funds, and residential real estate remains resilient thanks to improved household finances, though the sector continues to face structural constraints, notably rising production costs for new housing linked to a persistent labour shortage that is hampering new construction starts. That undersupply — not foreign money — is the main engine still pushing prices up. Meanwhile, stress is showing in adjacent parts of the property economy: between January and May 2026, 879 companies initiated legal insolvency proceedings, a 3.8% increase, with Real Estate Activities skyrocketing 82% in insolvencies compared with the same period the previous year. The OECD, in its 2026 country survey, flagged that housing affordability challenges reflect long-standing weaknesses in construction and rental markets and call for comprehensive reforms to remove investment obstacles, mobilise underused housing, and promote residential mobility. None of this is a re-run of 2013’s sovereign debt crisis — public debt has in fact fallen to under 90% of GDP — but the sharp jump in property-sector insolvencies is a genuine amber light worth watching, particularly for anyone buying off-plan from a smaller developer.
What this means if you’re buying from abroad
For foreigners still planning a purchase, the practical takeaway isn’t that Portugal has closed its doors — it’s that the easy paths have narrowed and the market has reoriented around domestic and resident demand. Financing terms for non-residents are tighter, the tax incentives that made Portugal exceptionally attractive (NHR, Golden Visa real estate) are gone or restructured, and due diligence on developers matters more given the rise in real-estate insolvencies. Budget for the full non-resident cost stack — a flat 7.5% IMT transfer tax on most residential purchases, 0.8% stamp duty, and typically 8–9% of the purchase price in total costs — and get a NIF and Portuguese bank account sorted early, since both are prerequisites before you can even sign a promissory contract. Our tax & NIF guide walks through the NIF and residency-tax mechanics in more detail, and our services team can help with fiscal representation and IMT calculations if you’re buying without being resident yet.
What to watch next
Keep an eye on INE’s Q2 2026 transaction release (due around September) to see whether the foreign-buyer decline deepens or stabilises, and watch whether the real-estate insolvency uptick spreads to construction proper or stays contained to smaller developers. Rate moves matter too — any further Euribor increase would tighten financing further for exactly the non-resident buyers already pulling back. For now, the picture is straightforward: Portugal’s housing market runs on domestic momentum, and foreign buyers are a shrinking, pricier slice of a market that no longer needs them to keep growing.
This article was produced with AI assistance and editorial oversight in line with our editorial policy. It is general information, not legal or tax advice.