Portugal’s Rising Salaries Make It a Top Relocation Choice

The latest data from Portugal’s National Statistics Institute (INE) reveals a continued rise in wages across the country, with the average gross monthly earnings reaching €1,525 in the first quarter of 2025, 5.3% year-on-year increase. While this marks a slight slowdown compared to the 6.4% growth at the end of 2024, the upward trend is clear: households in Portugal are earning more than they did a year ago.

But what does this mean for the local real estate market, particularly for property buyers in Lagos?

Wage Growth and Domestic Buyer Demand

When salaries rise, so does consumer confidence. For many Portuguese families who have postponed homebuying decisions in recent years due to inflation or interest rate volatility, higher incomes can offer renewed financial security. In markets like Lagos, which attract a mix of domestic and international buyers, even moderate increases in wages can influence the activity of local and regional purchasers.

Although the Algarve has traditionally relied heavily on foreign demand, the growing purchasing power of national buyers may start to reshape the market particularly for apartments, starter homes, and mid-range properties.

Could More Locals Afford to Buy?

According to the INE data (monthly):

- The base salary component rose 5.1% to €1,270

- The regular component (which includes meal allowances, etc.) rose 5.4% to €1,356

- The total average gross salary now stands at €1,525

These figures may still fall short of the income required to purchase high-end homes, but they narrow the affordability gap for a portion of the local market. Increased affordability could translate to more transactions in the mid-price segment, such as 1-2 bedroom apartments, suburban houses, or off-plan opportunities in areas slightly inland from Lagos.

What This Means for Sellers and Investors

If you’re considering selling your property in Lagos, the expanding domestic buyer pool may work in your favour. While international interest remains strong, sellers now have more reason to appeal to Portuguese buyers, especially those seeking year-round residences rather than seasonal homes.

For investors, the salary growth trend signals potential for rental market stability, as higher wages could support modest rent increases and longer tenancy durations.

A Balanced Market?

As wages grow and inflation cools slightly, Portugal may be moving toward a more balanced property market particularly in areas like the Western Algarve, where property values are still competitive compared to cities like Lisbon or Cascais.

This shift could mean:

- Steady price growth rather than sharp surges

- A more diversified buyer base, including first-time buyers and young professionals

- Increased demand for sustainable or energy-efficient homes within budget-conscious brackets

Final Thoughts

At B&P Real Estate, we’re closely watching how economic factors like wage growth influence the property landscape in Lagos. While the Algarve continues to attract foreign buyers, this new wave of local confidence is good news for those looking to sell, invest, or enter the market this year. Contact B&P Real Estate today for a valuation or for personalised property advice.