"The study's conclusions are that, although the interest rate is important, the conditions of the country's economic growth and the supply of housing in construction have a greater impact on housing prices than interest rates in the short term," ISMT professor and researcher Fernando Oliveira Tavares told the Lusa news agency.

The research is authored by Fernando Oliveira Tavares, from ISMT and the Portucalense University, Luís Pacheco and Margarita Carvalho, both from the Portucalense University, and Elisabeth T. Pereira, from the University of Aveiro.

The study “Evolution of the Real Estate Market in Portugal in the 21st Century” analysed the evolution of the real estate market in Portugal between 2000 and 2025, based on 100 quarterly observations and data from the National Institute of Statistics (INE), the Bank of Portugal, and Eurostat.

According to the researcher, interest rates are important for economic growth, but the disposable income of families “has a greater impact on the growth of house prices.”

Fernando Oliveira Tavares also pointed to the scarcity of supply, noting that the supply of construction “has fallen considerably” and “rehabilitation in city centres is practically nil,” which “has a large impact in terms of the growth of housing prices.”

Since the beginning of the century, new housing construction in Portugal has fallen by about 70%, creating a structural supply deficit that the market has yet to recover from.

To this imbalance is added the significant increase in construction costs, which have risen by more than 40% in the last decade.

"Fiscal policy could also help, but basically what determines housing prices is low supply and high demand, essentially a result of years of low supply in terms of construction," he said.

The researcher also noted that "those who come from outside to work here may seek housing, but initially, it will always be the rental market, not the purchase market."

The study focused on the home purchase market and, in its final conclusions, noted that "it would be interesting to analyse the rental market as well," he added.