House prices took off in Porto just two years after Lisbon house market boom

Between January 2011 and December 2023 house prices in Greater Lisbon and the Metropolitan Area of Porto doubled. In this period house prices continued to skyrocket, except during a brief interval during the pandemic crisis, according to a study into the behaviour of the Portuguese housing market between 2011-2023.

Reports business daily Negócios, the study ‘The Evolution of the Housing Sector in the Regions of Lisbon and Porto between 2011 and 2023: Identifying the periods of Exuberance of Prices’ has concluded that the periods of house price explosions began from March 2016 in the Municipality of Lisbon.

In Porto, the market explosion took off from September, 2018 say the authors of the study from the Ministry of the Economy’s Office of Strategy and Studies (GEE).

It says that the “variation in prices in the real estate market had a significant and direct effect on families”, but also on the quality of bank mortgages”.

The importance of this sector is also reflected in the ability of families to access houses at affordable prices.

The study used data of the average value of bank valuations (euros per m2) for the period (2011-2023) as an approximate indicator of property prices in the various municipalities.

The overall trajectory of rising house prices was only interrupted during the Covid-19 pandemic between 2020 and 2021, but then took off again with short bursts of “exuberance” thereafter both in 2022 and 2023 in both municipalities.

In the case of the Lisbon region, with the exception of Mafra, all municipalities saw at least a month of house price spikes in 2019 and in 2020, even during the pandemic in 2020.

In 2021, house prices did not significantly increase in Cascais, Lisbon or Loures, but took off again in 2022 and 2023, although they slowed in some municipalities in 2023, but in an idiosyncratic manner.

In general, the same was observed in the Porto Metropolitan Area, but in a less aggressive manner with exceptions such as the municipalities of Gondomar, Maia, Matosinhos, Valongo, and Vila Nova de Gaia where from 2019 there were periods of “exuberance” that continued until 2023.

Taking into account the simultaneous nature of various spurts and spikes in housing prices, the study’s authors suggest that there was a “contagion factor” particularly with municipalities that are next to each other, especially in the Lisbon region.