For those considering building a new home in the Algarve, recent data may prompt a pause. The cost of residential construction rose 3.8% in March 2025 compared to the previous year, according to Portugal’s National Statistics Institute (INE).

With labour and materials pushing prices upward, buying an existing property may be a more practical and cost-effective option, especially in popular regions like the Algarve.

While building a custom home offers the advantage of tailoring every detail to your preferences, it's becoming increasingly expensive. Labour costs jumped 7.1% in March alone, contributing most to the overall rise.

Material costs also edged up by 1.1%, with notable increases in items such as glass, thermal and acoustic insulation, and waterproofing materials, some of which have climbed by as much as 10%.

That said, some materials – like wood products, galvanized steel sheets, and PVC pipes – have seen price drops of 5-10%. These declines may appeal to some, but they haven’t been enough to counteract the broader upward trend.

Choosing between building and buying depends on your budget, timeline and how much of a challenge you’re looking for. And although modular construction is becoming popular, for buyers or investors eager to move quickly or avoid the delays and stress of managing a construction project, the resale market presents compelling advantages.

Not only can you view and assess what you’re getting, but prices may also be more predictable – and in some cases, negotiable. There’s also the potential of renovating older builds.

A local estate agent can help you explore the best available options. Get in touch with the team at Algarve Home Sales for expert advice.