Portugal has the highest level of housing overvaluation in the EU, with the European Commission estimating an average overvaluation of about 25%. This is the most pronounced gap among EU real estate markets according to the latest data available for the second half of 2025.
The Commission notes that housing price growth has outpaced income growth since 2016, and the disparity has widened notably over the past decade. The sharpest increases have been observed in Portugal, the Netherlands, Hungary, Luxembourg, Ireland, the Czech Republic, and Austria.
Affordable housing is a central focus of the EC’s new EU-wide plan, which aims to boost housing supply through construction strategies, including the renovation and conversion of vacant properties, and by simplifying permitting processes. The plan also proposes updating state aid rules to make investment in affordable and social housing easier for Member States.
In addition, the package calls for increased EU funding from long-term budget resources, cohesion funds, the InvestEU program, and the European Investment Bank. It emphasizes curbing real estate speculation through greater sector transparency and establishing a legal framework for local authorities to address housing issues via a new local accommodation law.
Special attention is given to young people and students who are particularly affected by housing constraints. Measures include funding for university residences and policies to prevent excessive mortgage burdens.
To coordinate efforts, the plan contemplates the creation of cooperation structures such as a Housing Alliance that brings together Member States, mayors, and regional authorities, along with market monitoring mechanisms.
Looking ahead, the EU targets the construction of roughly 650,000 new homes each year over the next decade, requiring about €150 billion in annual public and private investment.
The broader EU housing picture shows rising prices across member states, with average EU housing prices up roughly 60% since 2015 and some countries seeing increases over 200%. Rent and energy costs have also climbed, while new residential building permits have fallen by about 22% since 2011. In some cities, short-term rentals account for up to 20% of housing stock and have grown by more than 90% over the last decade.
The Portugal News remains committed to delivering independent, balanced coverage for readers worldwide, supporting the local community, foreign residents, and visitors through our print edition, website, and social channels. If you’re able, your support helps sustain our reporting.
What do you think about these plans? Do you believe the EU’s approach will meaningfully improve affordability, or might it introduce new complexities for property markets and local communities? Share your thoughts in the comments.
