Portuguese house prices had the biggest annual rise in at least 12 years as a shortage of real estate available for sale helped to further bolster property values.

Home prices rose 13.2% from a year earlier in the second quarter, according to the country’s statistics institute. That’s the biggest increase since the institute started collecting data on the housing market in 2010. Prices rose 3.1% from the first quarter.

Property developers including Vanguard Properties, which has invested about €1bn in Portugal, has blamed rising real estate prices on a housing shortage that’s caused by long delays in the issuance of new building licenses, especially in the capital Lisbon.

The shortage of new homes has coincided with rising demand from foreign buyers, who have flocked to Portugal in recent years in search of a warm climate and lower living costs. These buyers are willing to pay more than double for a Lisbon home than domestic buyers, the statistics institute said in a report in April.

Joana Almeida, a Lisbon councilwoman speaking at a real estate conference on 22 September, acknowledged the delays and said the city was working hard to speed up the licensing process in order to increase the supply of homes. “We need time to show good results,” said Almeida.