House prices in Portugal saw an annual growth of 6.5% at the beginning of this year, surpassing the global increase in housing costs (+3.6%).

This is despite house sales in the country and across Europe declining throughout 2023, leading to a deceleration in price growth.

Yet the recent drop in mortgage interest rates and the rise in purchasing power, stemming from an inflation slowdown, are aiding the recovery of the real estate market.

These elements are “accelerating the global growth in house prices,” as concluded in the latest Knight Frank report analysed by Idealista.

By reviewing 56 countries worldwide, Knight Frank concluded that the average house price increased by 3.6% between Q1 2024 and the same period last year. This growth is higher than the rate recorded at the end of 2023, suggesting that the cost of housing is accelerating globally. 

However, it remains below the 20-year average of 5.6%.

“With debt costs slowly starting to fall and with a limited supply of homes for sale, house price growth in the markets analysed grew by an average of 3.6% in the first quarter of 2024 compared to the same period last year, 4 percentage points more than in the previous quarter (+3.2%)”, according to Knight Frank’s Global House Price Index report.

It is also evident that house prices have risen in most countries over the past year. Specifically, houses for sale have become more expensive in 45 of the 56 markets analysed by the international consultancy, including Portugal.

“Many markets are suffering from a lack of homes for sale, as well as a slow pace of new home delivery, which means that relatively healthy housing demand is pushing prices to new highs”, said Liam Bailey, global head of research at Knight Frank, going on to caution that only lower housing credit costs “will support this growth in the long term”.

Meanwhile, with inflation remaining high in many global markets, the evolution of real house prices is negative. When accounting for inflation, house prices have decreased by an average of 0.4% over the last 12 months.

“Real price growth is now 3.3 percentage points lower than the long-term average (last 20 years) of 2.9%”, the report adds.