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Portugal: Portugal’s housing market is showing signs of stabilisation after years of supply shortages, although policymakers continue to tighten regulations around short-term rentals.
New data from the Bank of Portugal shows around 26,700 homes were completed in 2025, up from 25,300 in 2024, but still significantly below the levels seen before the global financial crisis in 2007.
Separate analysis from the central bank also found that Portugal’s housing gap turned positive for the first time in 11 years, indicating that new housing supply has begun to catch up with demographic demand after a decade-long deficit estimated at around 300,000 homes.
The findings come as the country continues to implement housing reforms aimed at improving affordability and increasing long-term residential supply.
Several municipalities have tightened restrictions around Alojamento Local (AL) licences, particularly in tourism hotspots including Lisbon and Porto, while the government has introduced measures designed to encourage long-term rentals over short-term accommodation.
Despite rising property prices, the Bank of Portugal said there is currently no evidence of a speculative housing bubble, suggesting price growth remains largely supported by underlying demand.
For the short-term rental sector, the latest data signals a changing operating environment, with policymakers focused on balancing tourism growth with housing accessibility for local residents.
Portugal remains one of Europe’s most popular destinations for international travellers and property investors, but operators may face continued regulatory pressure as authorities seek to manage housing supply over the long term.
Highlights
- Portugal completed 26,700 new homes in 2025, up from 25,300 in 2024
- The country’s housing gap turned positive for the first time in 11 years
- Municipalities continue to tighten short-term rental regulations
- The Bank of Portugal said there is no evidence of a housing bubble
- Policymakers remain focused on balancing tourism growth with housing affordability
