Portugal among Europe’s Top Five growth markets – but living here is the problem

Portugal has been ranked among the five European countries with the strongest growth potential for 2026, driven by a growing working-age population, an expanding startup ecosystem and increasing employment in high-skilled sectors.

But a new study warns that soaring housing costs could undermine those strengths.

The ranking, compiled by research platform PlayersTime, assessed 31 European countries across 11 indicators, including demographics, innovation, productivity, entrepreneurship, skilled employment, wages, economic activity and housing market trends. The analysis drew on data from organisations including Eurostat, the International Labour Organization, Numbeo and StartupBlink.

Spain topped the overall ranking, followed by the Netherlands, Ireland and France, with Portugal completing the top five.

According to the report, Europe’s fastest-growing economies are increasingly those combining innovation, skilled employment, expanding working-age populations and buoyant property markets capable of attracting talent, businesses and investment.

Portugal stood out particularly for entrepreneurship, growth in its working-age population and employment linked to technology sectors.

The report estimates Portugal has almost 6.8 million people aged between 15 and 64, representing around 65% of its population of 10.38 million. Between 2024 and 2025, the country’s working-age population increased by 1.5%, placing Portugal third in Europe behind only Malta and Ireland.

PlayersTime said the figures suggest Portugal has been increasingly successful in retaining younger workers and attracting talent through a more dynamic urban economy and a growing startup ecosystem.

However, the report identifies housing affordability as one of Portugal’s biggest emerging challenges.

While Portugal was not among the five European countries recording the steepest residential property price increases between June 2025 and June 2026, researchers said mounting pressure in the housing market—particularly in Lisbon and Porto—is becoming a significant constraint for residents, workers and investors.

“The most attractive and fastest-growing markets are not necessarily the cheapest,” the report concludes, arguing that higher property prices often reflect sustained demand, economic confidence and long-term investment appeal.

Switzerland recorded Europe’s largest increase in city-centre apartment prices over the past year, rising 14.8% to €16,412 per square metre. Malta (12.1%), Hungary (11.6%), Denmark (9.8%) and the Netherlands (8.6%) completed the top five.

At the other end of the market, Lithuania saw the sharpest decline in city-centre apartment prices, followed by Finland, France, Sweden and the United Kingdom.

PlayersTime data analyst Silvana Vladimirova said Europe is becoming increasingly divided between high-cost, high-demand economies and more affordable markets that may still be recovering or attracting weaker investment.

“More than affordability itself, it is now the pace of price growth—and the demand behind it—that best reflects each country’s position on Europe’s development map,” she said.

For Portugal, the report paints a mixed picture. Its growing workforce, entrepreneurial environment and skilled economy place it among Europe’s most promising markets, but unless housing becomes more affordable, one of the country’s greatest competitive advantages could become a barrier to future growth and investment.

Source: Executive Digest