By LiveAlgarve on 25th December 2024 - 2-3 m. reading time 

Firstly, Merry Christmas to everyone and a Happy New Year.

As we approach the end of 2024, it's an opportune moment to reflect on the market for homes in Portugal, and more specifically, the Algarve region, while also considering projections for 2025.

2024 Market Overview

In the first half of 2024, the Algarve experienced a 5% increase in property transactions compared to the same period in 2023, indicating a gradual recovery in the market. 

Nationally, the third quarter saw a record value of homes changing hands, amounting to €9.05 billion - a 28% rise. This surge in transactions, totalling almost 41,000 homes (a 19.4% increase from the previous year), has intensified the shortage of affordable housing. Factors contributing to this include increased demand from foreign buyers attracted by residency rights and tax incentives, as well as a tourism boom leading to more short-term holiday rentals (Source: Reuters).

In Lagos, the average price per square meter was €3,936 as of July 2024 (according to Idealista), reflecting the area's appeal to both domestic and international buyers.

2025 Outlook

Looking ahead to 2025, several trends are expected to influence the real estate market:

• Continued Price Growth: Caixa Geral de Depósitos (CGD), one of Portugal's leading banks, forecasts a continued rise in housing prices for 2025. The bank's CEO, Paulo Macedo, highlighted that housing demand will remain much higher than the available supply, pushing property prices even further up in the Portuguese market.
• Luxury Market Expansion: The luxury housing market is anticipated to thrive, particularly in prime locations like the Algarve. High-net-worth individuals and foreign investors are expected to drive demand for high-end properties, including penthouses, villas, and estates with premium amenities.
• Regional Variations: While the Algarve is poised for growth, other regions like Lisbon and Porto are also projected to see significant increases in property values. The Central Algarve, for instance, has experienced increases of up to 10.9%, and Lisbon saw a 9.1% increase as of November 2024 (Source: Portugal Pathways).

Conclusion

The real estate market in Lagos and the Algarve has demonstrated resilience and growth throughout 2024, with expectations for continued upward trends in 2025. The combination of sustained demand, particularly in the luxury segment, and limited supply, is likely to drive property prices higher.