Buying a property in Lisbon: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

Yes, the analysis of Lisbon's property market is included in our pack

Thinking of buying a property in Lisbon? You're not alone!

Many people are captivated by Lisbon's coastal beauty and dream of owning a chic apartment or a historic townhouse in this city.

Does it make sense from a financial perspective, though? Are property prices increasing in Lisbon? Is it expensive? Should you consider investing in Alfama or Bairro Alto? What about the taxes? What rental yields should I expect?

We've figured it out for you.

The Investropa team knows this market inside and out. As a matter of fact, we've put all our findings together in a pack. Get it now.

In the lines below, we will share some of this knowledge.

How's the real estate market in Lisbon?

Confused about the property market's status? Everyone has their views. As for us, we prefer stick to new data and stats for clear conclusions.

Property types

In Lisbon, there are various types of properties for sale to suit different preferences and needs.

These include charming apartments in historic neighborhoods like Alfama and Baixa, modern condominiums with amenities in areas like Parque das Nações, elegant townhouses in districts like Chiado and Lapa, as well as spacious villas with scenic views in places like Belém and Cascais.

Whether you're looking for a cozy city-center flat, a contemporary urban space, or a more traditional home, Lisbon offers a diverse range of property options to explore.

Buy or rent?

(If you plan to use it yourself and not as a rental)

Whether you're already living in Lisbon or planning to move to this Portuguese city, you might be weighing the options of buying a home or opting for a rental property.

Obviously, it's better to buy if you plan to stay in Lisbon long-term and benefit from the appreciation of the property's value over time.

Want to make a good decision? Check out the property price-to-rent ratio. This metric tells us how many years of rental income it would take to pay for a property at its current price.

According to Numbeo, the property price-to-rent ratio in Lisbon is around 20.34, which is around the world average.

Simply put, it would typically require 20 years of rental payments to buy a property in Lisbon.

Property prices in Lisbon

On average, according to the last data from Statistics Portugal, purchasing a property in Lisbon would cost you around $6,000 per square meter.

Obviously, there are big differences. A property in Chiado might have a different price per square meter than a house in Belém. We actually give you a more detailed breakdown in our pack for buying property in Lisbon and in Portugal.

To help you understand better, it means that, instead of purchasing a flat in Manhattan, you can become the owner of 2 properties in Lisbon.

However, housing prices in Lisbon are now higher (28%) than in Madrid.

The most expensive neighbourhoods in Lisbon are probably Estrela, Lapa, Avenidas Novas, and Chiado, while the cheapest neighbourhoods are likely Areeiro, Marvila, and Campo de Ourique.

Trends

First and foremost, we have to acknowledge that Portugal is, today, one of the most stable countries in the world. The last Fragile State Index that has been reported for this place is 27.5.

Don't overlook this while weighing the pros and cons of buying a property in Lisbon.

Also, according to the International Monetary Fund (IMF), Portugal's economy is expected to soar by 7.9% in the coming 5 years, resulting in an average GDP growth rate of 1.6%.

If you intend to invest in real estate in Lisbon it's a good thing because, as the economy grows, people's incomes (usually) increase, motivating them to invest in real estate, which causes a rise in property demand and prices.

Also, in Portugal, the average GDP per capita has changed by 5.0% over the last 5 years. It's a solid number.

According to this data point, property prices in Lisbon might go higher in 2024 and also later on.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Portugal right now.

Buying property in Lisbon

Buying real estate in Lisbon can be difficult due to the lack of reliable and updated information available throughout the process. That's why we have created the pack to buy property in Lisbon and in Portugal.

Buying process

Within our pack, we've covered the entire buying process extensively. This includes a detailed breakdown of prices and yields based on the area, advice on negotiating prices, and information about obtaining a mortgage.

Now, we're providing you with a simplified version.

This is the step-by-step process to purchase a property in Lisbon:

1. Research Lisbon's property market and set a budget.
2. Engage a reputable real estate agent familiar with the city.
3. Visit properties in desired neighborhoods.
4. Make an offer and negotiate the price, considering market trends.
5. Hire a solicitor experienced in Lisbon property law.
6. Sign a promissory contract and pay a deposit (usually 10% of the property value).
7. Obtain a Portuguese fiscal number (NIF) for tax purposes.
8. Secure financing through a local bank or have funds ready for the purchase.
9. Sign the final deed (escritura) before a notary public.
10. Pay property transfer tax and registration fees (IMT and IMI).
11. Register the property with the Lisbon Land Registry (Registo Predial).
12. Transfer ownership and receive the keys to your new property in Lisbon.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Portugal.

Make a profitable investment in Lisbon

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Where to find a property

Here are some websites where you can find properties in Lisbon.

• Casthelana Real Estate - They are a real estate agency specializing in property sales and rentals in Porto, Portugal, offering a variety of apartments and houses.
• Home lovers - They are a real estate website offering properties for sale and rent in Portugal (Lisbon, Porto, Cascais, Comporta, Madeira).
• Idealista - They are a property website, idealista, offering over 160,769 properties for sale in Portugal, including popular regions like Algarve, Lisbon, and more.
• Portugal Homes - They are a real estate agency, Portugal Homes, offering a wide range of properties for sale in Portugal, including Golden Visa properties.
• Properties in Portugal - Browse over 40,000 properties for sale, including apartments, villas, lands, and commercial properties.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Portugal.

Which properties for which budget?

As mentioned before, the average price per sqm in Lisbon is $6,000. A 1-bedroom property, which is 60 square meters in size, would cost approximately $360,000, and a 2-bedroom property, which is 85 square meters in size, would cost approximately $510,000.

Obviously, property prices will change based on both the property itself and its location.

Prices are usually higher in the best areas of Lisbon. An apartment in Chiado might cost you around $690,000, while a property on Avenida da Liberdade could be priced at $640,000.

But there are less expensive options in certain locations. You may find a house in Marvila for $460,000, or a house in Benfica priced only at $380,000.

We give a more detailed pricing list in our full pack for buying property in Portugal.

Common mistakes

Here are the main pitfalls when buying property in Lisbon, Portugal:

• Ignoring the potential impact of Golden Visa requirements for non-EU buyers.
• Overlooking the need for an energy performance certificate (Certificado Energético) before buying.
• Failing to consider the impact of short-term rental regulations on investment properties.
• Not being aware of local rent control laws and their effect on rental income.
• Neglecting to verify the property's seismic vulnerability due to the region's earthquake history.
• Overlooking the possible restrictions on property renovations in protected historic areas.
• Not considering the potential impact of rising property tax rates in the city.
• Failing to understand the complexities of land ownership laws, especially in rural areas surrounding Lisbon.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Portugal Property Pack

Living in Lisbon

Living in Lisbon is a wonderful experience, offering a vibrant city life with stunning architecture, great food, culture, and beaches nearby.

Cost of living

The cost of living in Lisbon is generally considered to be lower than other European cities, such as London or Paris. This is especially true when it comes to groceries, rent, and utilities, which tend to be much more affordable than in other cities.

Here are some examples to better understand the cost of living in Lisbon:

• Rent for a one-bedroom apartment in Chiado: €1,200/month.
• Monthly transportation pass for Carris (local transit): €40.
• Pastel de nata (local pastry) and espresso at Manteigaria: €2.50.
• Super Bock (local beer) in a Bairro Alto bar: €3.50.
• Monthly utilities for a 85m² apartment in Alfama: €120.
• Fitness club membership at Holmes Place: €50/month.
• Ticket to a Fado show in Alfama: €20-€30.
• Bottle of Vinho Verde (local wine) at a supermarket: €5-€8.

Neighbourhoods

We want to show information in an easy-to-understand way. So, we made a summary table that lists the different neighborhoods in Lisbon. For yields, prices and rents, check our property pack.

Life in Lisbon

The economy of Lisbon is largely based on services and tourism, with a large contribution from the port and technology sectors. The city is also becoming a major international financial centre, with a growing number of international banks and businesses.

According to the IMF's data, the GDP of Lisbon contributes to almost 44% of Portugal's GDP. That's a good thing, cities with strong economies often offer a steady influx of job opportunities, making property ownership a wise investment.

What expats usually like the most in Lisbon is the laid-back lifestyle, with plenty of outdoor activities like beach trips and hikes, and the vibrant nightlife with lots of bars and clubs.

Another great point to note is that Lisbon is a safe city, with a crime index of only 29, which is a really good score. Most crimes are minor crimes.

A good point for a property investor - Lisbon has an extensive public transportation system, including a metro, trams, buses, and funiculars.

Access to healthcare in Lisbon is excellent, with a Healthcare Index of 73. A strong healthcare system and infrastructure will always make a place more attractive, which is positive for real estate.

Finally, it is worth noting that the Catholic University of Portugal ranks among the top 500 universities in the world.

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Renting out in Lisbon

This section is for you if your goal is to buy a property and rent it out to generate income.

Long-term

Tenant Profiles in Lisbon

According to the data reported by Wikipedia, the home ownership rate in Portugal is 78%, which is average.

It means that, if you decide to buy and rent out in Lisbon, there will be a good number of people who can become your potential tenants.

If you decide to buy and rent out to long-term tenants, you should target young professionals, families, and expats looking to stay in Lisbon for a longer period of time. For short-term rentals, you should target tourists and business travelers looking for an affordable and comfortable place to stay.

Here is a little summary table we've made for you.

Rental yields

Nowadays, rental yields in Lisbon are usually below 5%. It's not much. A good rental yield is usually around 7% or higher. Maybe, you knew it already.

The best rental yields in Lisbon are typically found in older, centrally-located properties with lower purchase prices and higher rental demand due to their proximity to amenities and public transportation. These properties are often more attractive to tenants, due to their affordability and convenient locations.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Lisbon are taxed at 28%, which is relatively high.

Short-term

You could also decide to rent short-term to tourists, business travelers, or students looking to stay in Lisbon for a few weeks or months. Additionally, digital nomads and remote workers looking for a place to stay while working remotely may be a good target for short-term rental in Lisbon.

If you decide to go with that option, look for properties in the city center, particularly in the Baixa, Alfama, and Bairro Alto areas. Additionally, the Mouraria and Estrela neighborhoods are becoming increasingly popular, due to their proximity to the city center and their unique charm.

You will have some competition though - there are around 13,000 Airbnb listings in Lisbon. The average daily rate stands around $129.

You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Lisbon can make around $2700 per month. Also, the average occupancy rate is estimated at 93% (it's an impressive number).

Is it worth buying real estate in Lisbon then?

Absolutely, buying a property in Lisbon can be a fantastic idea if you're looking for a stable, long-term investment or planning to make the city your home. Lisbon offers a unique blend of coastal beauty, affordability, and a growing economy.

If you intend to reside in Lisbon for an extended period and enjoy the local lifestyle, owning a property provides stability and potential for appreciation over time. Portugal's strong economy, predicted GDP growth, and rising GDP per capita signal a positive outlook for property investment. As the economy thrives, people's incomes increase, leading to higher property demand and prices. Plus, Lisbon's cost of living is relatively lower than other European cities, making it an attractive choice.

However, if your stay in Lisbon is short-term, buying property may not be cost-effective due to transaction costs. Additionally, if you're solely focused on high rental yields, Lisbon's rental market, with yields typically below 5%, may not meet your expectations. Non-EU buyers should also be cautious of Golden Visa requirements, and it's essential to consider property tax rates, which can impact your overall return on investment.

Moreover, the competitive short-term rental market in Lisbon, with thousands of Airbnb listings, can make it challenging to generate consistent income from short-term rentals.

In summary, while Lisbon offers compelling opportunities for property investment and living, the decision to buy should align with your specific goals, whether for long-term stability and appreciation or other investment strategies.

Make sure you understand the real estate market in Lisbon

Don't rush into buying the wrong property in Portugal. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.