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Lisbon property prices are not dropping in 2025, but rather continuing to climb at an accelerated pace.
As of September 2025, the Lisbon residential market shows strong momentum with average prices reaching €5,642 per m² by June 2025, representing a 7.2% annual increase. Central neighborhoods like Chiado and Baixa command €5,000-€8,000 per m², while outer districts like Amadora and Loures remain in the €3,000-€4,500 range. Foreign buyers maintain a stable 40% market share, and despite stricter short-term rental regulations, the market fundamentals remain robust with limited supply continuing to drive prices upward.
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Lisbon property prices are rising, not falling, with 7.2% annual growth as of June 2025 and central districts commanding premium prices.
Supply constraints, foreign buyer activity, and policy changes continue to support price growth despite some cooling in rental demand.
| Market Indicator | 2024 Performance | 2025 Status (Sept) |
|---|---|---|
| Average Price per m² | €5,330 (Jan 2024) | €5,642 (June 2025) |
| Annual Price Growth | 5.5% | 7.2% |
| Central Lisbon (Chiado/Baixa) | €4,800-€7,500 per m² | €5,000-€8,000 per m² |
| Outer Districts (Amadora/Loures) | €3,200-€4,200 per m² | €3,000-€4,500 per m² |
| Rental Yields | 5.2% average | 4.96% average |
| Foreign Buyer Share | 38-42% | 40% |
| Time on Market | 3-4 months | 6+ months |
How have average property prices in Lisbon changed month by month since the start of 2024?
Lisbon property prices have shown consistent upward movement throughout 2024 and into 2025, with no monthly declines recorded.
Starting from approximately €5,330 per m² in January 2024, prices increased by 5.5% over the full year. The momentum accelerated significantly in 2025, with Q1 2025 recording the highest quarterly growth in eight years at 5.9%. By June 2025, average prices reached €5,642 per m², representing a 7.2% annual increase from the same period in 2024.
The Lisbon residential market has outpaced the national Portuguese average, with Greater Lisbon leading price appreciation across all major metropolitan areas. Monthly data shows steady increases ranging from 0.3% to 1.2% per month since early 2024, with no periods of price correction or decline.
This sustained growth pattern indicates strong underlying demand fundamentals that have remained intact despite broader economic uncertainties. The acceleration in early 2025 coincided with slightly lower mortgage rates following ECB cuts, which improved affordability marginally and supported transaction volumes.
What are the latest price differences between central Lisbon neighborhoods like Baixa, Alfama, and Chiado compared to outer districts like Amadora or Loures?
The price gap between central Lisbon and outer districts remains substantial, with premium neighborhoods commanding 60-150% higher prices per square meter.
| Area | Price Range (€ per m²) | Premium vs Outer Districts |
|---|---|---|
| Chiado | €6,000-€8,000+ | +80-160% |
| Baixa | €5,000-€7,500 | +65-125% |
| Alfama | €6,000-€7,500 | +80-125% |
| Amadora | €3,500-€4,500 | Baseline |
| Loures | €3,000-€4,000 | Baseline |
| Sintra | €3,200-€4,200 | Baseline |
Central historic neighborhoods continue to see sustained appreciation due to tourism appeal, limited supply, and foreign buyer preference. Alfama commands premium prices particularly for renovated properties, with new or fully modernized units often exceeding €7,500 per m². Ultra-premium properties in Chiado can exceed €8,000 per m², especially those with river views or historic significance.
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How many properties are currently listed for sale in Lisbon compared to the same time last year?
Property inventory in Lisbon remains constrained with listings stable or slightly lower compared to September 2024.
The market shows persistent supply shortages, with many properties remaining unsold for over six months rather than new inventory flooding the market. Active listings volume has not increased meaningfully compared to the same period last year, suggesting that supply constraints continue to be a key market driver.
Housing permit approvals have not kept pace with demand throughout 2024 and 2025, contributing to the ongoing shortage. Several inner-city projects focus on luxury apartments and regeneration, but the volume lags underlying demand from both domestic and international buyers.
This limited inventory environment has been a primary factor supporting price strength, as buyer competition remains elevated for quality properties. The lack of new supply particularly affects the central districts where development opportunities are most restricted by planning regulations and heritage protections.
What's the average time it now takes to sell an apartment in Lisbon compared to 2023?
Properties in Lisbon now take significantly longer to sell, with many remaining on the market for over six months compared to 3-4 months in 2023.
This extended selling period reflects either sellers maintaining higher pricing expectations or reduced urgency among buyers who are taking more time to evaluate options. The market has shifted from the more volatile conditions of 2023 when properties moved more quickly due to fear of missing out among buyers.
Despite longer selling times, properly priced properties in desirable locations still move within 2-4 months. Premium properties in central neighborhoods with competitive pricing can sell faster, while overpriced units or those in less desirable outer areas may sit for 8-12 months or more.
The extended timeline also reflects buyers' increased due diligence in 2025, with more thorough property inspections and legal reviews becoming standard practice. International buyers particularly are taking additional time to understand regulatory changes and tax implications.
How are rental yields in Lisbon trending in 2025, and are they going up or down?
Rental yields in Lisbon are declining, averaging 4.96% in 2025 compared to higher levels in 2024, as rental price growth has slowed significantly.
The cooling rental market shows rental price growth dropping from 14.4% in May 2024 to just 4.4% in May 2025. This deceleration has occurred while property purchase prices continue rising at 7.2% annually, creating a compression in yields that affects investor returns.
Rental demand has softened considerably, with a 43% drop in rental enquiries compared to 2024 levels. This reflects market saturation in some segments and reduced urgency among tenants who have more options available. The combination of slower rental growth and higher property prices means yields are trending downward across most property types.
Short-term rental yields have been particularly affected by stricter regulations, forcing some property owners to shift to long-term rentals at lower yields. Central Lisbon properties still command the highest yields, but even prime locations are seeing compression as purchase prices outpace rental growth.
What impact have recent changes in mortgage interest rates had on Lisbon's property market this year?
Mortgage rate decreases to 3-3.3% following ECB cuts have provided modest support to the Lisbon property market in 2025.
The slight reduction in borrowing costs has marginally improved affordability for buyers, contributing to the surge in transaction volume and price acceleration observed in early 2025. Lower rates have particularly benefited first-time buyers and those upgrading to larger properties within Lisbon.
However, the impact has been limited because property prices have risen faster than the interest rate savings, meaning overall affordability has not improved significantly. For most buyers, the monthly payment savings from lower rates have been offset by higher purchase prices.
Foreign buyers, who often purchase with cash or alternative financing, have been less affected by Portuguese mortgage rate changes. The rate environment has been more beneficial for Portuguese residents and EU buyers who rely on local financing options.
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Are foreign buyers still as active in Lisbon in 2025, or has demand slowed?
Foreign buyers remain highly active in Lisbon, maintaining a stable 40% market share in 2025, comparable to previous years.
International demand continues at elevated levels among investors and lifestyle migrants, supported by Portugal's ongoing appeal as a European investment destination. The Golden Visa program phase-out has not significantly reduced foreign buyer activity, as many investors have shifted to alternative residency pathways or are purchasing for lifestyle rather than visa purposes.
Brazilian, French, German, and American buyers continue to represent the largest foreign buyer segments. European buyers particularly benefit from easier financing access and fewer regulatory barriers, while non-EU buyers increasingly rely on cash purchases or alternative financing structures.
The sustained foreign buyer presence has been a key factor supporting price strength, especially in central neighborhoods where international buyers concentrate their activity. Their continued participation helps offset any softening in domestic demand and provides price stability during market adjustments.
How many new housing developments and building permits have been approved in Lisbon since 2024?
Building permit approvals in Lisbon have remained insufficient to meet demand, with notably low influx of new developments since 2024.
The housing permit approval process has not kept pace with underlying demand, contributing to persistent supply shortages that support price strength. Most new development activity focuses on luxury apartments and urban regeneration projects rather than affordable housing options.
Several high-profile projects in central areas target the premium market, but overall volume remains constrained by planning restrictions, heritage protections, and lengthy approval processes. Outer districts see more development activity, but this primarily serves local demand rather than international buyers focused on central locations.
The limited development pipeline means supply constraints will likely persist through 2025 and beyond, continuing to support price appreciation in existing properties. Urban densification projects and converted historical buildings represent the primary sources of new central inventory.
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What government policies or tax changes in 2025 are directly affecting Lisbon property prices?
Several significant policy changes in 2025 are reshaping Lisbon's property market dynamics, though none have caused price declines.
- Golden Visa Phase-out: Elimination of some property investment routes has shifted foreign buyer behavior but not reduced overall demand
- Short-term Rental Restrictions: Stricter Alojamento Local (AL) regulations limit new licenses and increase oversight in historic areas
- AL Tax Increases: Higher taxes on short-term rental income reduce speculative investment appeal
- Vacant Property Enforcement: Increased enforcement on speculative holdings and vacant units encourages active use
- Municipal AL Limits: New geographic restrictions on short-term rental licenses, particularly in central tourist areas
These changes have redirected some speculative investment away from short-term rentals toward long-term rentals or to outlying districts. However, core tourist areas continue seeing strong buying interest due to enduring tourism fundamentals and limited supply.
The policy environment has created more stability in residential neighborhoods by reducing short-term rental concentration, while maintaining investment appeal in properly zoned areas. Overall, the regulatory changes have not dampened property price growth but have shifted investment patterns geographically and by property type.
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How do Lisbon property prices compare with other major Portuguese cities like Porto or Faro right now?
Lisbon maintains its position as Portugal's most expensive property market, with prices 20-30% higher than Porto and other major cities.
| City | Average Price per m² | Difference from Lisbon |
|---|---|---|
| Lisbon (Central) | €5,642-€8,000 | Baseline |
| Porto (Central) | €4,200-€5,500 | -25% to -30% |
| Faro/Algarve | €3,800-€5,200 | -30% to -35% |
| Braga | €2,800-€3,500 | -45% to -50% |
| Coimbra | €2,200-€3,000 | -50% to -60% |
Porto has seen strong growth but average prices remain significantly below Lisbon's central rates. Coastal Algarve towns including Faro have experienced robust appreciation but still trade at substantial discounts to the capital.
Lisbon's premium reflects its status as the economic and political center, superior infrastructure, international connectivity, and concentrated foreign buyer demand. The price gap has remained relatively stable, with all major Portuguese cities seeing growth but Lisbon maintaining its leadership position.
Interestingly, Lisbon prices are now up to 25% higher than comparable areas in Madrid, highlighting the city's emergence as a premium European real estate market. This positions Lisbon properties at the upper end of Southern European pricing alongside Barcelona and Nice.
What's happening with short-term rental regulations in Lisbon, and how is that impacting property demand?
Lisbon has significantly expanded restrictions on short-term rentals through stricter Alojamento Local regulations, reshaping investment demand patterns.
New municipal limits restrict AL licenses especially in the historic center, with increased oversight and more stringent approval processes. Tax increases on short-term rental income have made some previously profitable AL investments less attractive, particularly for smaller investors.
These regulatory changes have shifted some investment demand from short-term to long-term rentals, and from central areas to outlying districts with fewer restrictions. However, core tourist areas still see strong buying interest due to enduring tourism fundamentals and the scarcity value of existing AL licenses.
Property owners with existing AL licenses benefit from grandfathering provisions, creating a two-tier market where licensed properties command premiums. The regulations have reduced speculative AL demand while maintaining fundamental property demand from end-users and long-term rental investors.
Overall, the changes have created more housing stock for residents while preserving tourism appeal in designated areas, contributing to market stability rather than price declines.
What do analysts and local real estate agencies predict for Lisbon's housing market in the second half of 2025?
Analysts and local real estate agencies predict continued price increases of 3-7% through the end of 2025, but at a more moderate pace than the early 2025 surge.
The consensus view expects the market to remain robust, supported by limited supply, stable foreign interest, and Lisbon's status as a top European investment location. Most agencies anticipate the 7.2% annual growth rate observed in early 2025 will moderate to 4-6% by year-end as some market fundamentals normalize.
Key factors supporting continued growth include persistent supply constraints, ongoing foreign buyer demand, and Portugal's continued appeal as a European investment destination. The positive outlook reflects confidence in Lisbon's long-term fundamentals despite some recent market cooling indicators.
Potential headwinds identified include possible interest rate increases, further policy restrictions, or broader European economic uncertainty. However, most analysts view these as risks to growth rates rather than factors that would cause price declines.
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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 property market in 2025 continues to defy expectations with sustained price growth rather than the anticipated decline many predicted.
The combination of limited supply, stable foreign demand, and supportive monetary policy creates a foundation for continued appreciation, though at a more moderate pace than the exceptional growth seen in early 2025.
Sources
- InvestRopa - Lisbon Price Forecasts
- EcoNews - House Prices Soar in Portugal
- Portugal Investment Properties - Living in Lisbon
- Bleisured - Buying Property in Lisbon 2025
- Tagus Property - Alfama Market Prices
- Green Acres - Lisbon House Prices
- Global Property Guide - Portugal Price History
- Euronews - Portugal Rental Demand
- The Portugal News - Property Market Growth
- Portugal Buyers Agent - Lisbon Real Estate