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The latest figures from the National Institute of Statistics (INE) show that, between January and March 2023, home sales in Portugal saw a year-on-year decline of 20.8%. House prices are decelerating as a result.

This drop in house transactions was registered for the third consecutive time, says the institute, due to the effects of rising interest rates and inflation on the Portuguese residential market.

“Between January and March 2023, 34,493 homes were sold, corresponding to a year-on-year reduction of 20.8% (a variation of -16.0% on the previous quarter) and a chain reduction of 10.5%,” notes the INE.

This lower number of houses sold translated into lower investment, with a total value of €6.9 billion euros, a drop of 15.2% compared to the same period in 2022. Fewer houses sold means less pressure of demand on supply, which in turn influences property prices.

And so, in the first quarter of 2023, house prices decelerated to 8.7% year-on-year, a difference of 2.6 percentage points when compared to the previous quarter. It's “the least expressive year-on-year price increase since the second quarter of 2021”, adds the report.

Meanwhile, although property transactions in the Algarve represented just 8.9% of the national total (3,080 homes were sold), the value of the transactions totalled around €947 million (13.8% of the national total).

According to INE figures, most homebuyers were foreign nationals – 4 out of 5 properties are bought by international buyers –, with strong demand for properties with 3-4 bedrooms.

The latest data follows a to and fro from experts, whose most recent assessment was that a property price drop was unlikely. But whether you're looking to buy right now or waiting to see how the market behaves, investing in property in Portugal is always a good idea.

We might not have a crystal ball, but we do have qualified property specialists who have lived in the Algarve for decades. Get in touch with us at Algarve Home Sales for a chat about your potential perfect property.