Residential property prices in Portugal increased by 7.9% in the first quarter of this year, compared with the same period of last year, the latest figures from the National Statistics Institute (INE) show.

Existing housing led the rise in prices, with growth of 9.2%, while there was a 4.2% increase in new housing, according to the data.

The rise in home prices was fuelled primarily by a sharp rise in sales, which increased by 25.9% year-on-year to €4.3bn (£3.8bn).

House price growth in Portugal is being led by Lisbon, particularly in the city centre and older parts of the Portuguese capital.

Anyone thinking of investing in Lisbon’s buy-to-let market can typically expect to achieve a gross rental yield of about 5%. 

Portugal’s property market is being supported in part by the ‘golden visa’ programme launched by the Portuguese Authorities in October 2012, which is a fast track service for foreign investors to gain residency in Portugal and free access to the vast majority of European countries in the Schengen area. The programme is targeted at high-profile non-European Union citizens, allowing direct access to citizenship after only six years.

Since the scheme – one of the most successful across the EU – was introduced just over four years ago, it has brought in more than €2.5bn (£2.2bn) in investment by non-EU citizens, with citizens of China by far the largest group of beneficiaries.