Funchal House Prices up Almost 10% in a Year
The cost of buying a house in Portugal increased by 8.4 percent in August compared with the same month last year, according to new data from the property platform Idealista. Among the cities most affected is Funchal, where prices grew by 9.6%, reaching 3,755/m². This places the capital of Madeira just behind Porto, where the average stands at 3,811/m².
Over the past 12 months, house prices for sale have increased in all regions of the country. Leading the increases is the Autonomous Region of the Azores (17.3%), followed by Alentejo (16.4%), Autonomous Region of Madeira (13.2%), Lisbon Metropolitan Area (10.1%), Central Region (10%), Algarve (9.4%), and North Region (7.6%).
Madeira’s Capital Could Soon Overtake Portugal’s Second Largest Urban Market
With Funchal’s housing costs rising faster than Porto’s - 9.6 percent against 4.7 percent - Madeira’s capital could soon overtake Portugal’s second-largest urban market. Lisbon remains the most expensive city at a whopping 5,866/m², but the race between Porto and Funchal highlights a new dynamic in the housing market.
Madeira’s Island Market Shows Double-Digit Growth
Looking at the wider island, the data shows that property prices in Madeira climbed by 13.1% over the past year. The average now stands at €3,536/m², keeping the island firmly among the most expensive regions of Portugal, after Lisbon and the Algarve.
This increase follows a national pattern in which every district and island with sufficient data reported higher prices, with Madeira ranking among those with the strongest growth. For comparison, nearby Porto Santo registered an even sharper rise of 23.9%.
Demand and Limited Supply Shape the Market
Analysts point to high demand and a limited number of available houses as key factors in the price increases. Easier access to mortgages and new support programs for young buyers - including tax exemptions and state guarantees - are also seen as encouraging more people to purchase property.
The imbalance between supply and demand continues to drive values upward
Idealista noted that while demand remains steady, the number of homes listed for sale is not keeping pace, particularly in attractive coastal and island locations.
Funchal Buyers Face Growing Challenges
For residents of Funchal, these trends are felt strongly. With house prices well above the national median of €2,951/m², many residents face extreme difficulties in accessing the market.
In Madeira, where the regional economy depends heavily on tourism, the competition for property between residents and outside buyers adds further pressure to the market.
As the latest data confirms, Funchal is not only one of the most expensive markets in Portugal today, but also one of the fastest rising.
Source: Idealista
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