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House prices zoom higher in Lisbon and Porto

LISBON (Reuters) – House prices in Lisbon and Porto jumped nearly 20 percent in the fourth quarter of last year over the same period in 2016 and were on average 7.6 percent higher across all of Portugal, data showed on Wednesday.

Portuguese house prices have risen sharply in the past couple of years, boosted by tourism and demand from foreign buyers who have snapped up properties in Lisbon which have been relatively cheap compared with other European capitals.

The National Statistics Institute said house prices in the Lisbon area rose 18.1 percent in the fourth quarter from a year earlier to an average of 1,262 euros per square meter. In Porto house prices rose 17.6 percent.

Across all of Portugal, average house prices rose 7.6 percent in the fourth quarter from a year earlier, to 932 euros per square meter.

Analysts have said they expect house prices to continue rising in Portugal this year, pushed by continued demand by foreign buyers. Record tourism numbers are also contributing as demand for short-term rental properties has risen strongly, especially in the main cities.

The housing boom helped propel economic growth to its highest level in nearly two decades last year. The expansion should continue this year, although at a slightly lower rate.