Authored by the expert who managed and guided the team behind the Portugal Property Pack
Yes, the analysis of Lisbon's property market is included in our pack
Lisbon's apartment prices have skyrocketed by 209% over the past decade, making it one of Europe's fastest-growing property markets.
The Portuguese capital now commands €5,000 to €8,000 per square meter in central areas, driven by foreign investment, limited supply, and strong international demand from digital nomads and relocating Europeans. While still more affordable than Paris or London, Lisbon's property market faces a severe affordability crisis as local salaries haven't kept pace with housing costs.
If you want to go deeper, you can check our pack of documents related to the real estate market in Portugal, based on reliable facts and data, not opinions or rumors.
Lisbon apartment prices increased 209% in 10 years, outpacing most European capitals except Budapest and Bucharest.
Central areas now cost €5,000-€8,000 per m² while outer neighborhoods range €3,000-€4,500 per m², creating a stark affordability gap with average local salaries of €1,200-€1,500 monthly.
| Factor | Impact on Prices | Current Status (2025) |
|---|---|---|
| Foreign Investment | Major driver in prime areas | Golden Visa phased out for Lisbon |
| Supply vs Demand | 10% supply drop in Lisbon | Severe shortage continues |
| Short-term Rentals | 20-30% of central stock | Government restrictions implemented |
| Average Price Central | €5,000-€8,000/m² | Ultra-prime reaches €10,000/m² |
| Average Price Outer | €3,000-€4,500/m² | Still rising but slower pace |
| Rental Yield | 5.65% gross yield | 6th most profitable in Europe |
| Government Response | "Mais Habitação" program | 25% tax on rental income reduced |
How much have average apartment prices in Lisbon gone up in the past 10 years compared to other European capitals?
Lisbon apartment prices increased by 209% over the past decade, making it one of Europe's fastest-growing property markets behind only Budapest (297%) and ahead of Bucharest (148%).
This dramatic price surge significantly outpaced Western European capitals like Berlin and Paris, which experienced much more modest growth rates during the same period. The 209% increase represents more than a doubling of apartment values since 2015, transforming Lisbon from an affordable European capital into a premium property market.
Prime neighborhoods like Príncipe Real and Chiado now command up to €10,000 per square meter, rivaling prices in established luxury markets across Europe. However, despite this rapid appreciation, Lisbon still remains more affordable than traditional Western European capitals like London, Paris, or Munich when comparing overall living quality and investment potential.
The acceleration was particularly pronounced between 2020-2023, driven by pandemic-related relocations, remote work trends, and increased interest from international buyers seeking lifestyle improvements. As of September 2025, this growth trajectory continues but at a more moderated pace due to government interventions and market maturation.
What is the current average price per square meter in central Lisbon versus outer neighborhoods?
| Area | Price Range (€/m²) | Characteristics |
|---|---|---|
| Prime Central (Baixa, Chiado, Avenida da Liberdade) | €5,000 - €8,000 | Historic center, luxury shopping, tourist areas |
| Ultra-Prime Central (Príncipe Real, premium Chiado) | €8,000 - €10,000+ | Exclusive locations, renovated historic buildings |
| Semi-Central (Saldanha, Avenidas Novas) | €4,500 - €7,500 | Business districts, modern developments |
| Outer Neighborhoods (Campo de Ourique, Alcântara) | €3,500 - €5,000 | Residential areas, good transport links |
| Suburban Areas (Amadora, Odivelas, Loures) | €3,000 - €4,500 | Commuter towns, family-oriented |
| Lisbon Metro Average | €3,644 - €4,935 | All areas combined |
| Portugal National Average | €2,393 | For comparison |
How does the supply of new apartments being built compare to the demand for housing in Lisbon right now?
Lisbon faces a severe housing supply shortage with apartment availability dropping by 10% in early 2025, while demand continues to grow from both local and international buyers.
The mismatch between supply and demand has reached critical levels, creating intense competition for available properties and driving prices upward. New residential construction authorizations increased nationwide to over 19,000 dwellings in Q1 2025, but central Lisbon specifically struggles with sluggish construction and complex permitting processes that restrict local supply.
Construction in prime central areas faces multiple challenges including historic preservation requirements, limited available land, and lengthy bureaucratic procedures. Many new developments are concentrated in outer areas or suburban locations, while demand remains strongest for central locations with easy access to amenities and transportation.
The supply constraint is particularly acute in the most desirable neighborhoods where foreign buyers and investors compete with locals, often paying above asking prices or purchasing properties sight unseen. This imbalance shows no signs of immediate resolution, suggesting continued upward pressure on apartment prices throughout 2025.
It's something we develop in our Portugal property pack.
What role do foreign buyers and golden visa investors play in driving up apartment prices in Lisbon?
Foreign buyers and Golden Visa investors have been major drivers of Lisbon's apartment price increases, particularly in premium neighborhoods where international investment has concentrated.
Western European and North American buyers have disproportionately targeted prime areas like Chiado, Príncipe Real, and Santos, often purchasing properties as second homes or investment vehicles. These buyers typically have higher purchasing power than local residents and are willing to pay premium prices for quality properties in desirable locations.
The Golden Visa program historically attracted significant investment into residential property, with investors required to purchase properties worth at least €500,000 to qualify for Portuguese residency. This created artificial demand in the luxury segment and pushed prices upward in areas popular with Golden Visa applicants.
However, Portugal has phased out Golden Visa eligibility for residential property purchases in Lisbon, Porto, and coastal Algarve areas as of 2023-2025 policy reforms. This change aims to redirect investment away from high-pressure housing markets and reduce speculative buying pressure on local housing stock.
Despite these restrictions, foreign buyer interest remains strong, with many international purchasers now focusing on lifestyle relocations, remote work arrangements, and long-term residence rather than visa-driven investments.
Don't lose money on your property in Lisbon
100% of people who have lost money there have spent less than 1 hour researching the market. We have reviewed everything there is to know. Grab our guide now.
How much of Lisbon's housing stock is being used for short-term rentals like Airbnb instead of long-term housing?
Central Lisbon has an estimated 20-30% of apartments in certain districts dedicated to short-term tourist rentals, significantly reducing long-term housing availability and driving up prices.
Neighborhoods like Alfama, Bairro Alto, and parts of Chiado have become dominated by Airbnb operations, with entire blocks transformed into tourist accommodations rather than residential housing. This conversion of housing stock removes apartments from the long-term rental market, creating artificial scarcity and pushing remaining long-term rental prices higher.
The concentration of short-term rentals varies significantly by area, with tourist-heavy central districts experiencing the highest conversion rates while residential neighborhoods maintain more traditional housing use. Property owners often prefer short-term rentals due to higher income potential, especially during peak tourist seasons.
Local reports document cases where traditional residential buildings have been entirely converted to tourist accommodations, displacing long-term residents and changing neighborhood character. This trend has particularly impacted historic areas where tourists prefer to stay, creating a gentrification effect that prices out local residents.
The Portuguese government has implemented the "Mais Habitação" program to address this issue, reducing Airbnb registrations and creating tax incentives to encourage property owners to return units to long-term rental markets.
What are the typical salaries in Lisbon compared to the average cost of renting or buying an apartment?
The affordability gap in Lisbon is severe, with typical gross salaries of €1,200-€1,500 per month while central one-bedroom apartments rent for €1,250-€1,800 monthly.
This means most locals spend well above the recommended 35% of income on housing, with many dedicating 50-70% of their earnings to rent alone. The purchase price-to-income ratio in Lisbon now exceeds most Western European cities, creating a situation where property appreciation has far outpaced wage growth.
Young professionals and middle-class families find themselves priced out of central areas, forced to live in suburban locations with longer commutes or share accommodations to afford rent. The situation is particularly challenging for Portuguese citizens entering the job market, as entry-level salaries rarely exceed €800-€1,000 monthly.
Many locals resort to living with family longer, sharing apartments with multiple roommates, or moving to neighboring municipalities with better price-to-income ratios. This affordability crisis has become a major social and political issue, with government intervention programs attempting to address the imbalance.
For international relocators or investors with foreign income sources, Lisbon remains relatively affordable compared to other European capitals, but for local residents, the housing market has become increasingly inaccessible.
How much of Lisbon's population growth comes from international residents versus local demand?
Lisbon's population growth is primarily driven by international residents, including digital nomads, EU relocations, and foreign professionals, rather than local birth rates or internal Portuguese migration.
Most net population growth in recent years has come from non-Portuguese arrivals, particularly young professionals seeking career opportunities and retirees attracted by the climate and lifestyle. This international influx has created demand for housing that exceeds what local population growth alone would generate.
The city has become a magnet for remote workers from higher-income countries who can maintain their earning power while benefiting from Portugal's relatively lower cost of living. Digital nomad visas and favorable tax treatments for foreign residents have further accelerated this trend.
EU citizens, particularly from Germany, France, and the Netherlands, represent a significant portion of new residents, often relocating for quality of life improvements while maintaining professional connections to their home countries. This demographic typically has higher purchasing power than local residents, contributing to upward price pressure.
Local Portuguese population growth remains modest due to low birth rates and young people emigrating for better economic opportunities elsewhere in Europe. This demographic shift means housing demand increasingly comes from international sources with different economic profiles than traditional local buyers.
What are the main taxes and transaction costs when buying an apartment in Lisbon?
Buying an apartment in Lisbon involves several significant costs that typically add 8-12% to the purchase price beyond the property value.
The IMT (Transfer Tax) represents the largest cost, ranging from 1-8% on a sliding scale, with most buyers paying 6-7% depending on property value and buyer status. This tax applies to all property purchases and cannot be avoided.
Stamp Duty adds another 0.8% of the property value, while notary fees, land registry costs, and legal fees typically total 1-2% of the purchase price. These professional services are mandatory and ensure proper legal transfer of ownership.
Ongoing costs include annual municipal property tax (IMI) ranging from 0.3-0.8% of the property's fiscal value, which is typically lower than market value. Property owners also face a 25% tax rate on rental income for short-term contracts.
Foreign buyers should budget for additional costs including currency exchange fees, international money transfers, and potentially higher legal fees if using international legal services. These transaction costs make property investment in Lisbon require careful financial planning beyond the purchase price alone.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Portugal versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
How do interest rates and mortgage accessibility in Portugal affect the affordability of apartments in Lisbon?
Portugal offers relatively competitive mortgage rates of 3-4% variable as of September 2025, but banks require substantial down payments of 20-30% and maintain strict borrower scrutiny.
The mortgage approval process in Portugal is rigorous, with banks carefully evaluating income stability, debt-to-income ratios, and employment history. Foreign buyers face additional documentation requirements and may need to provide proof of income from their home countries.
Rising interest rates have had only marginal impact on Lisbon's property market affordability recently because many transactions involve cash purchases or wealthy foreign buyers who aren't dependent on financing. This cash-heavy market means interest rate changes affect demand differently than in mortgage-dependent markets.
Portuguese banks typically offer loans up to 80% of property value for residents and 70% for non-residents, requiring significant upfront capital that many first-time buyers struggle to accumulate. The combination of high property prices and substantial down payment requirements creates additional barriers to homeownership.
For international buyers with strong financial profiles, Portuguese mortgages can be accessible, but the process requires patience and thorough documentation. Local buyers often find the financing requirements challenging given the relationship between property prices and local income levels.
What infrastructure, cultural, or lifestyle factors make Lisbon especially attractive to buyers compared to other Portuguese cities?
Lisbon combines rich cultural heritage, robust urban infrastructure, international connectivity, and vibrant startup ecosystems that create unique appeal compared to Porto or regional Portuguese cities.
The city offers world-class museums, historic architecture, and a thriving cultural scene while maintaining excellent public transportation, modern telecommunications infrastructure, and proximity to beautiful beaches. International schools, healthcare facilities, and business services cater to expatriate and international resident needs.
Lisbon's mild climate provides year-round outdoor living opportunities, with average temperatures rarely dropping below 10°C in winter or exceeding 30°C in summer. The coastal location offers easy access to beaches, surfing, and maritime activities within 30 minutes of the city center.
The digital nomad and startup ecosystem has flourished, with coworking spaces, tech meetups, and international networking opportunities that don't exist in smaller Portuguese cities. English is widely spoken in professional environments, making integration easier for international residents.
Quality of life factors include excellent restaurants, safe neighborhoods, walkable districts, and a relaxed pace of life that appeals to those seeking work-life balance improvements. These lifestyle advantages justify premium pricing for many buyers compared to other Portuguese locations.
It's something we develop in our Portugal property pack.
How does the rental yield in Lisbon compare to other major European cities for investors?
Lisbon offers a gross rental yield of 5.65%, ranking as the 6th most profitable European capital for buy-to-let investors as of September 2025.
This yield places Lisbon above major markets like Paris, Berlin, and Madrid, while remaining below Dublin (7.33%) and some Eastern European capitals. The combination of moderate purchase prices relative to Western European standards and strong rental demand creates attractive returns for property investors.
Other Portuguese cities like Setúbal offer even higher yields at 6.51%, but with lower liquidity and less capital appreciation potential than Lisbon. The Portuguese market generally provides better yields than saturated Western European markets while offering EU stability and legal protections.
Rental demand in Lisbon remains strong from both long-term residents and short-term tourists, providing multiple revenue strategies for investors. Central locations can command premium rents from international professionals and expats willing to pay for convenience and lifestyle benefits.
The yield calculation benefits from Portugal's growing reputation as a European lifestyle destination, supporting both rental income stability and long-term capital appreciation potential. However, investors must factor in the 25% tax rate on rental income and ongoing property management costs when calculating net returns.
What government policies or restrictions are being discussed or implemented to tackle rising apartment prices in Lisbon?
The Portuguese government has implemented the "Mais Habitação" program launched in 2023, which reduced Airbnb registrations and lowered the autonomous tax rate on rental income to 25% to encourage long-term rentals.
The Golden Visa program no longer allows residential property purchases in Lisbon, Porto, and coastal Algarve areas, redirecting investment away from high-pressure housing markets. This policy change aims to reduce speculative foreign investment in areas with acute housing shortages.
Authorities are actively considering additional restrictions on short-term rental licensing, potentially limiting new Airbnb registrations in central districts or requiring special permits for tourist accommodation conversions. These measures target the conversion of residential housing to tourist use.
Land use reforms are under discussion to encourage new construction and streamline permitting processes, particularly for affordable housing developments. The government is exploring ways to reduce bureaucratic delays that constrain housing supply in high-demand areas.
Future policy discussions include rent control mechanisms, social housing expansion, and tax incentives for developers who include affordable units in new projects. These comprehensive measures aim to rebalance the market between investment opportunities and local housing needs while maintaining Portugal's attractiveness to international residents and investors.
It's something we develop in our Portugal property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
Lisbon's apartment market reflects a complex interplay of international demand, supply constraints, and government intervention efforts that have transformed it into one of Europe's most dynamic property markets.
While prices have risen dramatically, the city maintains advantages in quality of life, rental yields, and growth potential that continue attracting both investors and residents seeking European lifestyle opportunities.
Sources
- Global Property Guide - Portugal Price Change 10 Years
- Bleisured - Real Estate Market in Lisbon
- Bleisured - Buying Property in Lisbon 2025
- Portugal Buyers Agent - House Prices
- InvestRopa - Average House Price Portugal
- Togofor Homes - Cost per Square Metre Portugal
- Global Property Guide - Portugal Price History
- Supercasa - Housing Supply Portugal
- University Nova Lisboa - Housing Research
- Pearls of Portugal - Housing Market 2025