Brussels estimates that houses in Portugal are the most overvalued in the EU

The European Commission estimates that housing prices in Portugal are overvalued by 25%, the highest current percentage in the European Union (EU), and it is also one of the worst countries in terms of changes in purchasing power.
“According to the latest available data, housing prices remained overvalued in several EU countries in the second half of 2025. The Commission estimates that the highest average overvaluation is in Portugal, at around 25%, surpassing other real estate markets,” says the European executive.
In a snapshot of the EU housing crisis, which accompanies the plan proposed today for affordable housing, the institution adds that “the growth of housing prices began to outpace income growth in 2016 and the gap between the two has widened sharply,” with the largest increases in the last decade “occurring in Portugal, the Netherlands, Hungary, Luxembourg, Ireland, the Czech Republic and Austria.”
The European Commission today presented the first EU-level plan to promote affordable housing, which includes a strategy for housing construction (focusing on vacant homes and the renovation and conversion of buildings), the simplification of construction rules (such as permits) and the revision of state aid rules (making it easier for Member States to invest in affordable and social housing).
It also covers the strengthening of European funds (from the EU’s long-term budget, cohesion policy, the InvestEU programme and the European Investment Bank), the fight against real estate speculation (with greater transparency in the sector) and a new law on short-term rentals (with a legal framework for local authorities to act).
In addition, attention is given to young people, including students, who are among the groups most affected by the housing crisis, with measures to mobilize investment in university residences and to prevent excessive deposits.
Cooperation structures will also be created, such as a Housing Alliance, involving Member States, mayors and regional authorities, as well as mechanisms for monitoring the market.
Over the next 10 years, the EU will have to build around 650,000 new homes per year, which implies public and private investment of 150 billion euros annually.
The European Union is facing a housing crisis, in countries such as Portugal, where house prices and rents have risen significantly, making it difficult to access affordable housing, especially for young people and low-income families.
House prices in the EU have increased on average by up to 60% since 2015, with some Member States recording increases of more than 200%, while rental prices and energy costs have also continued to rise.
However, residential building permits have fallen by around 22% since 2011.
Added to this is the pressure exerted by short-term rentals, which in some parts of the EU account for up to 20% of the housing stock, after having grown by more than 90% in the last 10 years.