The massive entry of new construction into the Portuguese residential market has almost doubled the stock of new homes for sale in the last five years, with almost 21 thousand units available in the last quarter of 2025, according to idealista’s annual report on the Portuguese housing market.
Despite the increase in supply, production has not been able to fill the lack of affordable housing.
The new supply is concentrated in the main cities and tourist areas: Lisbon and Porto account for almost three quarters of the total number of new homes announced among large cities. Funchal (5.9%), Braga (3%), Faro (2.9%) and Setúbal (2.9%) follow. In large centers in the interior — such as Portalegre, Vila Real or Guarda — the presence of new constructions is residual.
New homes sell, on average, 40% more than existing ones, according to data from the National Statistics Institute (INE) for the summer of 2025 included in the analysis. The national average price announced for new homes stood at 4,165 euros/m2 in the last quarter of 2025, with four cities exceeding this average: Lisbon (7,574 euros/m2), Funchal (4,833 euros/m2), Porto (4,236 euros/m2) and Setúbal (4,198 euros/m2). The locations with the lowest values were Guarda (1,737 euros/m2) and Portalegre (1,436 euros/m2).
The report points to multiple factors putting pressure on prices, such as high construction costs (including labor shortages), expensive urban land, long and onerous licensing processes and significant tax burdens. These elements have created a “perfect storm” that makes new homes less affordable for many families.
To mitigate some costs, the Government led by Montenegro presented a tax package that reduces VAT from 23% to 6% on the construction of new housing intended for sale up to 660 thousand euros (value updated this year) and proposes to speed up urban licensing. The proposals passed through the parliamentary committee, but are not yet in force. The lack of clarity regarding the practical application of the 6% VAT has already led some promoters to put projects on hold. stand‑bywhich may contradict the pace of licensing, highlights the study.
By the third quarter of 2025, almost 25 thousand new homes had been sold, around 20% of total family housing transactions — the highest number of new housing transactions since at least 2020, according to INE. The North region concentrated 37% of these sales, followed by the Center (16.3%) and Greater São Paulo (15.9%). The Azores recorded the lowest participation (1.2%).
In the set of 126,728 family home transactions in Portugal (new and existing), the North and Greater Lisbon regions were the scene of 49% of transactions (30% and 19%, respectively). Next are the Center (16%), Setúbal Peninsula (10%), West and Tagus Valley (9%), Algarve (7%), Alentejo (5%) and Madeira and Azores (2% each).
Licensing and pipeline
There are positive signs in licensing, as, by November 2025, almost 39,000 family homes had been authorized — the highest rate in the last five years, according to INE cited by idealista. The majority of the future supply will be made up of medium typologies, as almost 70% of the planned homes will have two or three bedrooms.
The North also leads in licensing, with more than 45% of licenses granted (17,640 units), followed by the Center (6,368) and Greater São Paulo (5,984). The Azores are at the bottom of the list with 714 licensed homes.
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