Buyers with tax residence outside Portugal purchased 20.1% of all homes sold in the Algarve in 2025, a new report has revealed, reinforcing the region’s status as one of the country’s most sought-after property markets, particularly among overseas residents looking to invest or relocate.
This same report also reveals that Portugal’s housing price index rose by 17.6% in 2025, marking the sharpest increase in the available statistical reports, according to data released on Monday by the National Statistics Institute (INE). The annual rise represents an acceleration of 8.5 percentage points compared with 2024, highlighting a significant intensification in house price growth over the past year.
According to data released by INE, the Algarve accounted for 42.4% of the total value of housing purchases made by foreign tax residents in Portugal last year. This maintains the region’s position as the country’s most exposed to international property investment.
In practical terms, nearly three in every ten homes acquired in Portugal by this group are located in the Algarve, which represented 29.7% of such transactions. In value terms, the concentration is even more pronounced: more than four in every ten euros spent by foreign buyers on housing in Portugal were invested in the region.
Overall, one in five homes sold in the Algarve in 2025 was purchased by a buyer with tax residence abroad. These transactions accounted not only for 20.1% of total sales volume, but also for 31.3% of the region’s total property value.
Despite these figures, foreign investment in Algarve property actually declined compared with 2024. The share of transactions fell by 3.7 percentage points in volume and 4.6 percentage points in value.
However, whilst less was spent on the region year-on-year, the Algarve strengthened its stake at the national level. In 2025, the region increased its share of foreign purchases by 2.4 percentage points in number of transactions and by 4.0 percentage points in value.
This suggests that, although international buying activity decreased across Portugal, a larger proportion of those transactions continued to be concentrated in the Algarve.
In value terms, these transactions amounted to €3.4 billion, a decrease of 2.1% compared with 2024.
Buyers from the European Union continued to dominate this segment, accounting for 4,416 property purchases (down 9.6% year-on-year). Meanwhile, buyers from outside the EU acquired 4,055 homes, marking a sharper decline of 17.1%.
Despite the drop in foreign demand year-on-year, Portugal’s overall housing market still reached new highs in 2025. A total of 169,812 homes were sold nationwide, the highest figure in the INE’s statistical series, representing an 8.6% increase compared with the previous year.
The total value of housing transactions rose even more sharply, reaching €41.2 billion, up 21.7% year-on-year.
Source: INE
