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During the observed period, Portugal's new housing construction cost index reached nearly *** points by May 2025, reflecting a significant increase from the base year of 2021. This overall rise in construction costs includes increases in the indexes of both materials and, especially, labor cost in the construction sector.

Trends in residential construction

The proportion of one-dwelling residential construction in Portugal has grown steadily since 2017, accounting for ** percent of new builds in 2023. This trend coincides with a decrease in mostly non-residential construction, which fell to its lowest share of approximately ** percent in the same year. The northern region of Portugal has emerged as a hotspot for new housing, completing over * new dwellings for family housing in 2023, while Greater Lisbon saw a preference for three-bedroom dwellings in new constructions.

Housing market dynamics

Despite the growing construction costs, Portugal's residential property sector is performing confidently, which is reflected in rising residential construction permits. The number of permits issued for residential property construction, which had declined sharply from nearly * in 2007 to less than * in 2020, rebounded to almost * in 2023, an uptick that does not match Portugal’s severe housing problems.