It’s time to explore the likelihood that property prices on São Miguel are falling for the first time in over 15 years. Since 2010 the largest of the Azores islands has been seeing a steady and dramatic increase in price per square meter not only in the more populated areas but across the island as a whole.
Let’s look at property prices declining in São Miguel what this could mean for you, a normal person.
If you currently live in the Azores you’ll easily to able to see for yourself that the sheer number of properties going onto the market have heavily exceeded the number of homes that are actually being sold, and that the houses that have been sold over the last year have been closed at prices well above the rapidly exponential market trend.
If we look at Idealista right now you’ll see 800 plus listings for São Miguel, only in the Ponta Delgada area, while national transaction figures and price indicators seen over the last 18 months show prices pushed well above market averages (Portugal saw record transaction values and sharp price rises into 2024). (Idealista)
You will, if you live on Sao Miguel, have noticed that a lot of the post-Covid development push that has been scarring the suburbs and torturing the neighbours are nearing completion, promising to flood the already peaking market with cheaper single family homes. Even though they are often owned by developers who would benefit from keeping the price point high they are owned by several groups that are very much in competition with each other, and irregardless to sell more by undercutting each other they will likely out price the properties that are currently on the market. (Novidades – The Islands and the Diaspora)
My third point of reference is the environment for foreigners hoping to buy and renovate properties on the island, with waiting times of up to two years to break the earth and a growing lack of faith in the bureaucracy surrounding legalising and getting funding for such project, the immigrant community are simply losing interest in buying derelict buildings.
One of the main reasons for a drop in property prices is the ability for normal people to pay back what’s borrowed! In Portugal the mortgage rates that saw a sharp increase between 2022 and 2024 have gotten to a point that by the time someone has paid off their home they can easily have paid almost double the properties closing cost, and often at a rate that would outstrip rental prices if the market continues with this slow decline (Reuters), causing many people with the vision of ownership to rethink and to sign a long term rental agreement instead.
Although markets are unstable and difficult to predict, São Miguel has seen a huge price hike that is simply not sustainable now that US citizens face harsher VISA regulations and hurdles to be permitted to purchase property themselves (Global Citizen Solutions) , and the once eager client base of European Union members are simply losing interest in the Azores due to overpopulation and excessive tourism.
What the Data Suggests
- New housing supply is increasing. In the Azores, the number of dwellings in new constructions for family housing stood at 548 units completed in 2023, an increase of 22.6% year-on-year. (Statista)
- Licensing for new constructions has also surged. For example, by June 2025, in the Autonomous Region of the Azores, there were 763 dwellings in new construction licenses, up 43% compared to 532 in the same period a year before. (Supercasa)
- Bank appraisal values have been rising, but median licensed dwellings in new constructions have been increasing faster. In June 2025, Azores recorded a 12% year-on-year variation in bank appraisal value of housing. (Supercasa)
What is less clear from public sources:
- Exactly how many houses are for sale at any given moment in São Miguel, compared to how many are being sold in the last 12 months. There is no easily accessible, current data on sales volume vs inventory that shows a sharp inflection point.
- How far above “real market value” recent transactions have actually been (as opposed to asking prices).
Pressure Points Causing Price Weakening
Taking the data plus local conditions, the following dynamics could yield a drop in house prices in São Miguel over the next 2-3 years:
- Mass construction after COVID
After the COVID‐19 pandemic, housing demand shot up (both from locals and foreigners). Developers responded: more licenses for new construction, more projects underway. As these developments finish, there will be a significantly expanded supply of single-family homes and apartments. Even if much of this remains under developer ownership initially, they compete—both with each other and with second-hand / resale housing. This tends to dampen price inflation and often pushes prices down, especially for properties not in premium locations or with less desirable features. - “Overpriced” resale stock lingers
Many properties currently on the market may have been priced assuming continuing growth—or based on recent “outliers” of sales. If buyers begin to believe that those pricing assumptions are inflated, then those houses will sit longer, get negotiated down, or have to reduce asking prices. - Challenges for renovating / restoring properties
The consensus is that foreign buyers / immigrants are less willing to take on derelict or very old properties, because bureaucracy (permits, legalising renovations, obtaining funding/grants) can take years or not happen at all. Waiting times to “break ground” on renovations can be long and extend without warning, which increases risk. So the demand for lower-cost restored or fixer-upper houses is weaker. - Regulatory & demographic headwinds
- For non-EU / US citizens, there may be tighter regulation or higher costs in permitting, which reduces the pool of buyers.
- Some reports suggest European buyers are showing less enthusiasm, possibly due to concerns about overpopulation, infrastructure strain, or cost of living rising.
- Also, in many urban centres in Azores, more housing is being built than in more rural / peripheral areas, even as those latter areas may be depopulating. Oversupply in certain zones could exert downward pressure. (OECD)
Why the Drop Hasn’t (Yet) Been Sharp — But Could Snowball
So far, there is no strong publicly available evidence that prices have fallen sharply, just hints that growth is slowing, that supply is increasing, and that many buyers are hesitating due to high prices.
A noticeable decline might begin with a few percentage points off peak over a year, mostly in non-prime areas or for properties that are overpriced, but once more of the developments finish and the number of houses for sale increases, the competition among sellers could accelerate the slide.
Added to this: if interest rates climb again (or even if borrowers expect them to) or if credit becomes tighter, fewer buyers will be able to risk buying at such high prices. At that point, the forced adjustments (price reductions, more negotiating, more properties sitting on market) could accelerate the decline.
Potential Magnitude & Timeline
- Short term (12-18 months): modest declines (somewhere between 5-10%) for average priced properties in certain municipalities (especially outside Ponta Delgada or premium coastal zones).
- Medium term (2-3 years): significant devaluation is possible and likely if supply continues to outstrip demand, and sentiment shifts. This would dramatically affect prices in many segments, and even more in overvalued areas.
Thoughts & feelings
While no one can definitively predict real estate cycles, the real estate prices in São Miguel have been artificially inflated beyond the true market demand and now many potential buyers have been priced out of the market, most of all the local population of the Azores, where the average wage is 200eur less than the mainland and the monthly minimum wage stands at 870eur.
After many years of rising prices propped up by demand, limited supply, inflation, and speculative expectations which some would say were driven by the real estate industry, these supports are weakening.
If you are a potential buyer, now is the time to watch the market more than jump in at peak asking prices. If you are a seller, there will be pressure soon to adjust expectations.