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Yes, the analysis of Lisbon's property market is included in our pack
Deciding whether to buy or rent in Lisbon requires careful consideration of upfront costs, monthly expenses, and your long-term plans in Portugal's capital.
As of September 2025, buying a decent one- or two-bedroom apartment in central Lisbon costs between €280,000-€500,000, while renting the same property averages €1,400-€1,900 monthly. The break-even point typically occurs after 7-10 years of ownership, making your timeline and financial stability crucial factors in this decision.
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.
Buying in Lisbon requires €70,000-€105,000 upfront for a €350,000 property, while renting needs €2,800-€5,600 initially.
Monthly ownership costs include mortgage payments of €1,200+ plus €175-€400 in fees, taxes, and maintenance, while renters pay €100-€200 beyond rent for utilities and services.
| Factor | Buying | Renting |
|---|---|---|
| Upfront Costs (€350K property) | €91,000-€133,000 | €2,800-€5,600 |
| Monthly Housing Costs | €1,375-€1,600+ | €1,500-€2,100 |
| Break-even Timeline | 7-10 years | Immediate flexibility |
| Price Trend (2025) | +15-17% annual growth | +2.16% rent cap |
| Best For | Long-term residents (5+ years) | Short-term stays, flexibility |
How much does it cost to buy versus rent a decent apartment in Lisbon right now?
Buying a decent one- or two-bedroom apartment in central Lisbon costs between €5,600-€6,800 per square meter as of September 2025.
For a typical 50-70 square meter flat, you're looking at purchase prices ranging from €280,000 to €500,000, depending on the specific neighborhood and property condition. Prime areas like Baixa and Alfama command over €7,000 per square meter, while emerging neighborhoods like Beato and Marvila offer better value at €5,000-€5,500 per square meter.
Renting the same quality apartment costs €1,400-€1,900 monthly in central districts and €1,000-€1,400 monthly in peripheral areas. This means you'd pay roughly €16,800-€22,800 annually in rent for a property that might cost €350,000 to purchase.
The price-to-rent ratio in Lisbon currently sits around 18-20 years, indicating that buying costs roughly 18-20 times the annual rent. This ratio has increased significantly due to rapid price appreciation over the past five years.
What upfront money do I need to buy a property in Lisbon?
Buying a property in Lisbon requires substantial upfront capital, especially for non-resident foreigners.
The down payment alone ranges from 10-20% for Portuguese residents but increases to 20-40% for non-residents. For a €350,000 property, expect to provide €70,000-€140,000 as a down payment, with most non-resident buyers needing at least €105,000.
Closing costs add another 6-8% of the purchase price, including IMT (Property Transfer Tax) of 6-7% for most properties, stamp duty of 0.8%, and legal fees of 1.5-2%. Real estate agent commissions of 5% are typically paid by the seller.
If renovation work is needed, budget €1,700-€2,700 per square meter for mid-range improvements, or up to €3,500 per square meter for luxury finishes. For a 60-square-meter apartment needing updates, renovation costs could reach €102,000-€162,000.
Total upfront costs for a €350,000 property typically range from €91,000-€133,000, not including potential renovation expenses.
What deposits and fees do I need upfront when renting in Lisbon?
Renting in Lisbon requires significantly less upfront capital compared to buying, but foreign tenants often face additional requirements.
Standard rental deposits range from 1-3 months' rent, plus one month's rent paid in advance. For a €1,400 monthly apartment, expect to pay €2,800-€5,600 upfront just for deposits and advance payment.
Foreign tenants without local income or a Portuguese guarantor (fiador) may be asked for higher deposits or additional months of rent paid in advance. Some landlords request up to 6 months' rent upfront from international tenants.
Agency commissions, when charged to tenants, typically equal one month's rent. Additionally, Portugal requires a 10% stamp duty on one month's rent, paid at lease signing.
Total upfront costs for renting usually range from €2,800-€7,000 for a standard €1,400 monthly apartment, making renting much more accessible than buying for most people.
What are the monthly costs of owning property in Lisbon?
Monthly ownership costs in Lisbon extend well beyond your mortgage payment and can significantly impact your budget.
| Cost Category | Monthly Amount | Annual Total |
|---|---|---|
| Mortgage Payment (€250,000 loan) | €1,200-€1,500 | €14,400-€18,000 |
| Condo Fees | €75-€200 | €900-€2,400 |
| Property Tax (IMI) | €50-€75 | €600-€900 |
| Home Insurance | €10-€25 | €100-€300 |
| Maintenance Reserve | €40-€100 | €500-€1,200 |
| Total Monthly Costs | €1,375-€1,900 | €16,500-€22,800 |
Mortgage payments vary based on interest rates and loan terms, but expect €4.80-€6.00 per €1,000 borrowed at current rates of 3-4% for residents. Non-residents typically face higher rates and stricter lending criteria.
Property taxes (IMI) are calculated at 0.3-0.45% annually of the property's fiscal value, which is usually lower than market value but has been increasing in recent years.
What monthly costs do renters pay beyond rent in Lisbon?
Renters in Lisbon face additional monthly expenses that can add €100-€200 to their housing budget.
Utilities including electricity, water, and gas typically cost €80-€150 monthly for a one- or two-bedroom apartment, depending on usage and energy efficiency. Summer air conditioning and winter heating can push costs toward the higher end of this range.
Internet service ranges from €25-€45 monthly for standard broadband speeds suitable for remote work and streaming. Premium fiber packages with higher speeds cost more but provide better reliability.
Building maintenance fees, when not included in rent, add €50-€100 monthly in well-managed buildings with amenities like elevators, doormen, or communal areas.
It's something we develop in our Portugal property pack.
Total additional monthly costs for renters typically range from €155-€295, making the true cost of renting a €1,400 apartment closer to €1,555-€1,695 monthly.
How long must I live in Lisbon for buying to be cheaper than renting?
The break-even point for buying versus renting in Lisbon typically occurs after 7-10 years, depending on your specific circumstances and property choice.
This calculation considers the high upfront costs of buying (€91,000-€133,000 for a €350,000 property) against the monthly savings of ownership versus renting similar properties. Given current market conditions, monthly ownership costs often exceed rental costs in the first few years.
Factors that shorten the break-even period include choosing properties in appreciating neighborhoods, securing favorable mortgage terms as a resident, and accounting for potential rental income if you temporarily relocate.
Conversely, the break-even period extends if you factor in opportunity costs of the large upfront investment, property maintenance needs, or if you're subject to higher non-resident mortgage rates and down payment requirements.
For most buyers planning to stay in Lisbon for at least 5-7 years, ownership begins to make financial sense, especially when building equity in an appreciating market.
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What's the current trend in Lisbon property prices and equity building potential?
Lisbon property prices have experienced remarkable growth, rising 15-17% year-over-year through mid-2025, with a cumulative 38% increase over the past five years.
The market is showing signs of moderation with fewer sales transactions and increased negotiation between buyers and sellers, but no significant price drops have occurred. This suggests a stabilizing rather than declining market.
For the next 5-10 years, property experts expect continued but slower price appreciation. While the explosive growth rates of recent years may not repeat, building equity appears highly probable given Lisbon's fundamentals including tourism, tech sector growth, and limited housing supply.
Foreign investment restrictions and new construction limitations in central areas support long-term price stability. However, buyers should expect more realistic price negotiations and longer selling periods compared to the seller's market of recent years.
Current owners who bought before 2020 have seen substantial equity gains, while new buyers in 2025 are positioned for more modest but steady appreciation over the medium term.
How do current mortgage rates compare to rental increase limits?
Current mortgage interest rates in Portugal range from 2.5-3.5% for fixed-rate loans for residents, while non-residents typically face rates up to 5.5% and stricter qualification requirements.
Variable mortgage rates, which many Portuguese borrowers choose, currently range from 3-5% but fluctuate with European Central Bank policy changes. Recent rate increases have made mortgages more expensive than in previous years.
In contrast, annual rent increases in Portugal are legally capped. For 2025, the maximum allowable rent increase is 2.16%, providing predictability for tenants but potentially limiting returns for landlords.
This creates an interesting dynamic where mortgage costs can rise faster than rental income for investor-owners, while rental costs for tenants increase at a controlled pace below current inflation rates.
The rental increase cap makes renting particularly attractive during periods of rising interest rates, as your housing costs remain more predictable compared to variable mortgage payments.
How easy is it to sell property or earn rental income in Lisbon?
Property liquidity in Lisbon remains good but has become more challenging compared to the seller's market of recent years.
Typical sales timelines now range from 3-6 months, with some properties taking longer in slower market segments. Realistic pricing and property condition significantly impact selling speed, with overpriced properties sitting on the market for extended periods.
For rental income, gross yields in central Lisbon range from 4-5% for long-term residential leases. Short-term rental yields through platforms like Airbnb can be higher but require proper licensing and compliance with local regulations.
| Rental Strategy | Gross Yield Range | Requirements |
|---|---|---|
| Long-term Residential | 4-5% | Standard lease agreement |
| Short-term/Airbnb | 6-8% | AL license, local taxes |
| Student Housing | 5-6% | Proximity to universities |
| Corporate Rentals | 4-5% | Furnished, flexible terms |
| Luxury Properties | 3-4% | High-end finishes, premium locations |
Property management services are readily available for investors who don't want hands-on involvement, typically charging 8-12% of rental income for full-service management.
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.
What legal and tax implications should foreign buyers and renters know?
Foreign property ownership in Lisbon faces no city-specific restrictions, but broader Portuguese policies have changed significantly for non-EU buyers.
The Golden Visa program, which previously attracted foreign investment through real estate purchases, now generally excludes Lisbon and other high-demand areas for new applicants. This reduces one investment incentive but doesn't prevent property purchases for personal use.
Tax implications for foreign owners include a 28% flat tax rate on net rental income for non-residents, compared to progressive rates for Portuguese tax residents. All property owners must file annual IMI property tax returns regardless of residency status.
Short-term rental operations require an AL (Alojamento Local) license and payment of local tourism taxes. New licenses in central Lisbon are increasingly difficult to obtain due to municipal restrictions.
For renters, lease agreements must comply with Portuguese tenancy laws, which generally favor tenant rights including controlled rent increases and protection against arbitrary eviction.
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Which Lisbon neighborhoods offer the best value for different budgets and lifestyles?
Lisbon's neighborhoods vary dramatically in price, lifestyle, and investment potential, offering options for different budgets and preferences.
Central heritage areas like Baixa and Alfama command premium prices above €7,000 per square meter but offer unmatched character, tourist appeal, and cultural immersion. These areas suit buyers prioritizing location over space and those targeting short-term rental income.
Modern central districts including Avenidas Novas and Saldanha provide excellent connectivity and contemporary amenities at €6,500-€7,200 per square meter. These neighborhoods appeal to professionals and families wanting urban convenience with better infrastructure.
Family-friendly areas like Campo de Ourique and Estrela, popular with expats, offer community atmosphere and good schools at €6,000-€6,500 per square meter. These areas provide excellent long-term living quality and steady rental demand.
Emerging neighborhoods such as Beato and Marvila present the best value at €5,000-€5,500 per square meter, with ongoing urban regeneration projects and growing cultural scenes. These areas suit buyers seeking appreciation potential and don't mind being early adopters.
Peripheral areas like Benfica and Odivelas offer affordability at €3,700-€4,000 per square meter while maintaining good public transport connections to central Lisbon. These areas work well for budget-conscious buyers and families prioritizing space over location.
How does income security influence the buy versus rent decision?
Your income stability and long-term plans in Lisbon should heavily influence whether you commit to a mortgage or maintain rental flexibility.
Mortgage obligations create long-term financial commitments that require consistent income for 20-30 years. Job loss, reduced income, or unexpected expenses can lead to financial stress and potential property loss if payments cannot be maintained.
Renting provides flexibility for career changes, job relocations, or economic uncertainty. If your work situation changes, you can more easily downsize, relocate, or adjust housing costs without the complexity and costs of selling property.
For remote workers or those with location-independent income, buying makes more sense as you can commit to Lisbon long-term while potentially earning income in stronger currencies. However, consider exchange rate risks if your income comes from outside the Eurozone.
Recent immigrants to Portugal should consider their visa status, career development trajectory, and social integration before committing to property purchases. Renting allows time to understand the market, establish local credit history, and confirm your long-term commitment to the country.
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The decision ultimately depends on balancing your financial capacity, risk tolerance, and confidence in your long-term plans in Lisbon's dynamic property market.
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.
The decision between buying and renting in Lisbon ultimately depends on your financial capacity, timeline, and risk tolerance in Portugal's dynamic property market.
While buying requires substantial upfront investment and suits long-term residents, renting offers flexibility and lower barriers to entry for those uncertain about their permanent commitment to the city.
Sources
- Portugal Residency Advisors - Cost of Living in Lisbon
- Global Property Guide - Portugal Rental Market
- LinkedIn - Lisbon Property Market 2025 Snapshot
- Immo Lusitania - Portugal House Price Growth
- Idealista - Lisbon Property Prices
- Move to Cascais - Renting Guide Portugal
- Portugal Xpert - Mortgage Guide for Foreigners
- Idealista - Property Buying Costs Portugal
- Portugal Buyers Agent - Lisbon Property Guide
- Tytle - Portugal Property Taxes Guide