Portugal overvalued by 35%, warns European Commission as Spain offers better value

Portugal is paying 35 per cent more than fair value for property, according to the European Commission.

Prices in Portugal have surged 73 per cent over five years. Spain has also seen growth, but at a more modest pace—46 per cent over the same period. However, the Portuguese market is heavily concentrated around three cities: Lisbon, Porto and the Algarve. Spain offers far greater diversity, from coastal regions to rural areas, with multiple price points.

The European Commission has identified the Portuguese market as the most overvalued in Europe. Price growth there outpaces even the booms seen in Eastern Europe. Meanwhile, Portugal is experiencing growing protests against housing costs and mounting political pressure on authorities.

Spain presents a calmer picture. Yes, prices are steep in Madrid, the Balearic Islands and premium Barcelona neighbourhoods. But the national market remains diversified, with substantial housing supply and genuine demand from tourists and immigrants. Price growth there reflects economic fundamentals rather than speculation.

For foreign buyers seeking a second residence or retirement property, Spain is becoming an increasingly attractive alternative. The risk profile is lower, and the choice is greater.