Portugal’s housing prices continued to increase as international buyer demand helped the market deal with the pressure stemming from higher interest rates.

Over half of new developments on sale in the first half of this year have been sold, according to a statement out on Wednesday by Confidencial Imobiliario, which collects Portugal’s property market data.

House prices in Portugal rose 6.2% overall in July compared to the same month last year, as per findings by real estate site Idealista.

Overseas demand is worsening a housing crunch that has seen prices continue to rise and driven costs in Lisbon to all-time high levels, increasing nearly threefold since 2015, Bloomberg reports.

“About 65% of our clients are foreigners or Portuguese nationals living abroad. The vast majority of these sales are for people who wish to live and work in Portugal,” said the head of Vanguard Properties, Jose Cardoso Botelho.

He forecasts delays in acquiring building permits for new homes will exacerbate the current shortage.

Portugal’s government has pledged to accelerate the licensing processes and is also planning to bring an end to the golden visas.

For over 10 years, the golden visa initiative has granted a route to residency for buyers from outside the European Union who invest more than €350,000 in property in the country.

Furthermore, back in January, S&P Global Ratings forecast that Portugal’s house prices would decline 4.4% in 2023 after increasing 6.8% last year. This would signal the largest decline among the 11 European countries included by the ratings agency.

It would also convey the effect of elevated interest rates in Portugal, where a large majority of mortgages are of a variable rate, S&P added.