Rising Construction Costs Continue to Influence Property Values in Portugal

Construction costs have become one of the most influential variables in Portuguese property valuation.

According to recent data, labour shortages and persistent material price inflation continue to push building costs above historical averages. For 2026, the official reference construction cost used for tax purposes increased again, reinforcing this structural shift.

For valuers, this has direct implications:

• Replacement cost values increase, supporting higher asset values.

• Rebuilding or new development becomes less financially accessible.

• Existing properties gain relative value due to scarcity.

This environment also reshapes feasibility studies and residual land valuations. Projects once considered viable may no longer meet return thresholds, while well-located existing buildings — even older stock — benefit from rising substitution costs.

In practical terms, today’s valuation process must integrate market evidence with construction economics, not treat them as separate realities.

https://www.portugalresident.com/construction-costs-continue-to-rise-in-portugal/