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
What will happen in Lisbon’s real estate market? Will prices go up or down? Is Lisbon still a hotspot for foreign investors? How is Portugal’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Lisbon, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Demand for coastal properties in Lisbon will grow as more foreign buyers seek vacation homes and investment opportunities
Foreign buyers are increasingly targeting Lisbon's coastal properties for vacation homes and investment opportunities due to several compelling reasons.
Firstly, the rising property prices in Lisbon's coastal areas highlight a strong demand. In 2023, Lisbon experienced a price increase of over 10%, with some areas reaching up to 10,000 euros per square meter. This trend indicates that the market is thriving and attractive to investors looking for high-value properties.
Additionally, the increasing number of foreign property transactions in Lisbon underscores the growing interest from international buyers. In 2023, the Greater Lisbon region accounted for 18% of all home sales in Portugal, with a significant portion involving buyers from outside Portugal and the EU. Notably, US citizens have become prominent players in this market, with their share rising from 2% in 2016 to 15% in 2023.
Moreover, the surge in tourism in Lisbon has contributed to the appeal of coastal properties. In 2023, Lisbon welcomed a total of 18.76 million overnight visitors, reflecting a robust tourism market. This influx of tourists creates a demand for short-term rentals, offering lucrative opportunities for property investors.
Sources: CaixaBank Research, Rightmove, Road Genius
2) Coastal property values will fluctuate due to environmental concerns and increased scrutiny
Coastal properties in Lisbon are facing increased scrutiny and potential value fluctuations due to environmental concerns. One major reason is the rising sea levels and increased flooding risks. Scientific studies have shown that Lisbon is highly susceptible to the impacts of sea-level rise, with projections indicating that by 2100, a significant area could be vulnerable, affecting thousands of buildings and residents.
Additionally, historical data on coastal erosion highlights that beach erosion is a dominant trend along Portuguese coasts. This ongoing erosion further exacerbates the vulnerability of coastal properties, making them less attractive to potential buyers. The Portuguese government is actively addressing these issues by implementing integrated coastal management strategies, focusing on sustainable solutions like beach and dune nourishments to combat erosion and rising sea levels.
Insurance companies are also responding to these environmental risks by raising premiums for coastal properties. This financial aspect, combined with media reports on environmental risks, is influencing real estate trends. Buyers are becoming more cautious about the risks of living near the coast, which could lead to a shift in demand away from these vulnerable areas.
Sources: MDPI, Copernicus
We have made this infographic to give you a quick and clear snapshot of the property market in Portugal. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
3) Lisbon’s property prices will keep rising due to strong demand from local and international buyers
Lisbon's residential property prices have been on the rise, and this trend is expected to continue. In 2023, the average cost per square meter for homes in Lisbon reached a record €5,426, marking a 5.8% increase from the previous year. This upward trajectory is projected to persist, with prices anticipated to rise by 3% to 7% in 2025 compared to 2024 values.
The demand from international buyers has been a significant factor. In 2023, the Greater Lisbon region saw 18% of all home sales in Portugal, with 23% of these involving buyers from outside Portugal and the EU. Notably, US citizens were the leading foreign buyers, followed by the French and British, making up a substantial portion of the market.
Government incentives, such as the Golden Visa program, continue to attract foreign investment, further supporting price growth. Additionally, Lisbon's popularity as a tourist destination has fueled the short-term rental market, particularly in charming areas like Alfama, contributing to rising property prices.
Sources: CaixaBank Research, ETIAS, The Portugal News
4) Affordable housing supply will grow due to government initiatives, affecting market dynamics
In recent years, Lisbon has faced a significant increase in demand for affordable housing, especially among young people and low-income families. Housing prices rose by 120% between 2012 and 2022, and rental prices increased by over 30% in the past five years. This has made it difficult for many residents to find affordable places to live.
To address this issue, the Portuguese government announced a comprehensive strategy to tackle the housing crisis. This includes a 30-measure programme as part of the Recovery and Resilience Plan, aiming to unblock funds for 25,000 new homes. The "Construir Portugal" program also supports affordable housing through fiscal incentives and urban planning reforms, with a budget of 2.8 billion euros targeting 59,000 units by 2030.
Despite these efforts, the number of housing transactions in Portugal fell by 18.7% in 2023, with a notable decline in Lisbon. This indicates a persistent shortage and affordability issue. The government is also planning legislative changes, such as reforms to the Land Law, to increase land availability for affordable housing projects.
Sources: World Economic Forum, The Portugal News, Essential Business
5) Luxury rental yields in Lisbon will rise as expat demand increases
Lisbon's luxury rental market is on the rise thanks to a growing number of expatriates.
In 2022, Lisbon welcomed over 118,000 foreign residents, a trend that has been climbing since 2016. This influx highlights the city's charm and appeal to international folks looking for a new home.
The demand for luxury rentals is evident with an 8.1% increase in house rents in 2023. This spike is mainly due to a housing shortage, which naturally pushes prices up. Expatriates, especially digital nomads and remote workers, are flocking to Lisbon for its lively culture and booming tech scene, making high-end rentals more sought after.
Lisbon is a hotspot for digital nomads, ranked 2nd globally by Spot a Home, which makes it a magnet for professionals wanting a vibrant work-life balance. The Portuguese government has also rolled out visa programs to attract international talent, further boosting the housing demand.
These elements combined make Lisbon's luxury rental market a promising investment opportunity. The city's growing reputation and strategic initiatives are drawing in more expatriates, who are eager to settle in this dynamic environment.
With its unique blend of culture, innovation, and opportunity, Lisbon is becoming a top choice for those seeking luxury living. The market is poised for growth, driven by the increasing number of expatriates looking for high-end accommodations.
Sources: Statista, Place Brand Observer
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6) Demand for senior-friendly housing in Lisbon will grow as the population ages
Lisbon is seeing a noticeable rise in its aging population, with the average age jumping from 41.1 years in 2011 to 45 years in 2023.
People in Portugal are living longer, with a life expectancy now at 81.17 years. This means more folks are reaching their senior years, and they need homes that are easy to get around in. In Lisbon, the aging ratio is 188.1 elderly for every 100 young people, showing a big chunk of the population might need special housing.
Lisbon's real estate market is catching on to this shift. The city is working on developing and renovating homes to fit the needs of medium- and low-income residents, including seniors. This is part of a larger plan to tackle the affordable housing issue while making sure the elderly have what they need.
Urban planning documents and government reports are also pushing for senior-friendly infrastructure. This means more accessible housing options are on the horizon, which is great news for those looking to settle down in Lisbon.
For anyone considering buying property in Lisbon, it's worth noting that the city is actively adapting to meet the needs of its aging residents. This could mean more opportunities for investment in senior-friendly housing.
As Lisbon continues to evolve, the demand for accessible homes is likely to grow, making it a smart move to keep an eye on this trend if you're thinking about buying property here.
Sources: Statista, The Portugal News, World Economic Forum, INE
7) Property values in Areeiro will rise as it becomes a tech startup and innovation hub
In recent years, Areeiro has been gaining attention as a promising area for tech startups and innovation. This shift is largely due to the rising number of tech startups setting up offices in Lisbon, which already boasts over 2,500 startups, including several unicorns. As these companies grow, they naturally increase the demand for residential properties in nearby areas like Areeiro.
Moreover, the Portuguese government has been proactive in attracting tech companies by offering incentives such as the Startup Visa and zero crypto taxes. These measures have positioned Portugal as a top European tech destination, making neighborhoods like Areeiro more attractive to tech companies and their employees.
Additionally, the tech sector in Lisbon is expected to grow by 25% by 2024, leading to more job opportunities and, consequently, a higher demand for housing in areas like Areeiro. This demand is further supported by real estate agents who have observed increased interest in Areeiro properties from tech industry workers, indicating a direct impact on property values.
Sources: Tech.eu, Nucamp, Portugal Buyers Agent
8) More foreign investors will enter Lisbon’s real estate market because of attractive tax incentives
In recent years, Lisbon has become a hotspot for foreign investors in the real estate market, and this trend is likely to continue. One of the main reasons is the favorable tax incentives offered by Portugal, particularly through the Non-Habitual Resident (NHR) tax regime. This regime provides attractive tax conditions, especially for high-income earners and entrepreneurs, making Lisbon an appealing destination for investment.
Additionally, the popularity of Portugal's Golden Visa Program has played a significant role in attracting foreign investors. Despite some changes to the program, it remains highly sought after, with a diverse range of applicants from countries like China, Russia, and Brazil. The program's requirements, such as minimal stay periods, indicate sustained interest from international buyers.
Moreover, Lisbon's real estate market has been under the economic spotlight, with media coverage highlighting its favorable economic conditions and high returns on investment. This media attention, combined with the presence of international real estate agencies, has helped promote Lisbon as a prime destination for real estate investment.
Sources: The Portugal News, Portugal Homes, Nomad Capitalist
We made this infographic to show you how property prices in Portugal compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
9) New tax rules will boost energy-efficient home upgrades, affecting property values
In recent years, Lisbon has seen a significant push towards energy efficiency, with Portugal being above the European average in energy efficiency improvements. Almost 30% of homes have experienced upgrades in the past five years, showing a clear trend towards more sustainable living.
The Portuguese government has been proactive in supporting these changes through initiatives like the Programa de Apoio a Edifícios Mais Sustentáveis, which offers up to 85% reimbursement for energy-efficient renovations. This financial support makes it more appealing for homeowners to invest in upgrades like A+ energy class windows and solar panels.
Moreover, consumer surveys reveal that over two-thirds of respondents are concerned about environmental and decarbonization requirements. This indicates a growing intention among homeowners to invest in energy-efficient improvements, which is expected to have a material effect on property values.
Lisbon's city hall serves as a prime example of the benefits of energy-efficient upgrades. After significant renovations, the building reduced emissions by 55% by 2030, showcasing both economic and environmental advantages.
Sources: The Portugal News, Pearls of Portugal, DGEG, PwC, Politico
10) More Asian investors will buy property in Lisbon for diversification and growth opportunities
Asian investors are flocking to Lisbon for real estate opportunities.
With direct flights now available from Seoul to Lisbon, it's easier than ever for investors to explore the city. This convenience, combined with strategic expansions, has made Lisbon a hotspot for those seeking new ventures.
Lisbon's property market is booming, with prices steadily climbing. The Portuguese government sweetens the deal with tax breaks and subsidies, especially in more affordable interior regions, making it a magnet for international buyers.
Known as a tech and startup hub, Lisbon's appeal is undeniable. Its strategic location and skilled workforce make it a prime spot for global operations, drawing in tech-savvy investors from around the world.
The tech sector's growth is a major contributor to Portugal's GDP, further enticing international interest. Asian investors, in particular, are eyeing Lisbon as a promising base for expansion.
Lisbon's vibrant ecosystem and supportive environment are key factors in its rising popularity. The city's reputation as a thriving hub is attracting a diverse range of investors looking for growth and diversification.
Sources: Bleisured, GuestReady, The Portugal News
11) Stricter short-term rental rules in Lisbon will impact Airbnb investment profits
In recent years, Lisbon has faced a significant rise in property prices, largely driven by the high demand for short-term rentals. This surge has made housing less affordable for locals, forcing many residents out of their homes due to the cost of living crisis.
Residents have increasingly complained about the noise and disturbances caused by short-term rentals, which have transformed communities into bustling leisure centers. This has led to rising noise levels, littering, pollution, and overcrowding, further straining the quality of life for locals.
Approximately eight percent of Lisbon's housing stock is dedicated to short-term rentals, a substantial figure that exacerbates the housing crisis. The Portuguese Government has recognized these negative impacts, leading to the introduction of Decree-Law 76/2024, which revokes mandatory short-term rental license renewals and imposes restrictions on new registrations.
Public opinion in Lisbon has also shifted, with movements like the Movement for a Housing Referendum (MRH) gathering significant support for stricter regulations. This reflects a growing desire among residents to address the housing issues caused by short-term rentals.
Sources: Short Term Rentalz, LSE Business Review, Schengen News
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12) Lisbon’s affordable housing prices will stay steady as government efforts balance the market
In recent years, Lisbon has made significant strides in addressing its affordable housing crisis. Since 2021, the city has constructed and renovated over 1,500 homes specifically for medium- and low-income residents. This is a substantial increase compared to the mere 17 apartments built annually over the previous 14 years.
Additionally, a new program aims to renovate 2,000 vacant flats across 11 boroughs, further expanding affordable housing options. The Portuguese government's €800-million public investment plan, spanning from 2022 to 2028, is the largest in three decades and has already shown early success in stabilizing the housing market.
Moreover, the government has introduced a new housing strategy to improve the 'More Housing' package, which includes changes to the Land Law. This allows rural land to be used for sustainable housing projects, providing affordable housing for rent and controlled-cost housing for specific professions.
Sources: World Economic Forum, Essential Business
13) Co-living spaces will become more popular as young professionals look for affordable housing options
In recent years, the trend of co-living spaces has been gaining traction among young professionals in Lisbon, primarily due to the rising demand for affordable housing. Housing prices in Portugal, including Lisbon, have been on the rise and are expected to continue increasing until at least 2026. This has made it challenging for many young people to afford traditional housing options.
As rental prices in Lisbon have surged, co-living spaces have emerged as a practical solution. These spaces offer a more affordable alternative to traditional rentals, making them attractive to younger renters who face affordability constraints. The mismatch between the demand for housing and the available supply has further fueled the popularity of co-living arrangements.
Moreover, the number of co-living spaces in Lisbon has been growing, with the city becoming a significant hub for this type of housing. The increase in co-living units, along with the success of existing models like Same Same Living, highlights the potential of co-living to meet the needs of young professionals seeking community-oriented living arrangements.
Sources: Knight Frank, The Portugal News, The Global Circle, Green Ocean Property Management
14) Demand for modern, tech-enabled apartments in the city center will grow as more young professionals move in
In recent years, Lisbon has become a magnet for young professionals, especially those in the tech industry. This shift began with the relocation of the Web Summit in 2016 and the establishment of tech hubs by major companies like Volkswagen and Mercedes-Benz. These developments have attracted a significant number of young talents to the city, making it a key innovation hub in Europe.
Young professionals, particularly Millennials and Gen Z, have shown a strong preference for urban living. This is evident in the high concentration of young professionals in Lisbon's city center, where 30% of the country’s businesses and 37% of its employees are located. The dynamic and attractive nature of the region makes it a prime spot for these individuals seeking vibrant city life.
Moreover, surveys indicate that young buyers in Lisbon are increasingly looking for modern amenities and smart home technology in their living spaces. This trend is reflected in the growing demand for luxury real estate with features like private pools, gyms, and excellent views of the city. The rise of remote work and digital nomadism has also contributed to this demand, with over 16,000 digital nomads living in Lisbon by the end of 2023.
Lisbon's investment in infrastructure and public transport further supports the growing demand for urban living and modern amenities. The city's development of tech hubs and coworking spaces provides modern work environments that appeal to young talent, reinforcing the trend towards smaller, more efficient living spaces that prioritize convenience and modern amenities.
Sources: EURES, Sifted, Portugal Buyers Agent, Regional Development
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Portugal. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
15) Luxury property prices in the city will rise moderately as wealthy buyers look for exclusive homes
Lisbon's luxury real estate market is booming, and it's not slowing down anytime soon.
Thanks to an influx of high-net-worth individuals moving to Portugal, the city is seeing a surge in demand for upscale properties. In 2024, Portugal was ranked 9th globally for attracting millionaires, with over 800 expected to settle in the country. This trend is largely driven by favorable tax incentives like the Non-Habitual Resident regime, making Portugal a hotspot for foreign investors.
In Lisbon, the demand for luxury homes is outpacing supply, especially in prime areas. This scarcity is pushing prices up as wealthy buyers vie for exclusive properties. The presence of international celebrities and business leaders buying homes here has also boosted Lisbon's reputation as a top-tier destination for luxury living.
Imagine strolling through neighborhoods where the rich and famous have set up homes, adding a touch of glamour to the city. The limited availability of these high-end properties means that prices are likely to keep climbing, making it a potentially lucrative investment.
For those considering a move, Lisbon offers not just a home but a lifestyle, with its vibrant culture, stunning architecture, and a climate that’s hard to beat. The city’s appeal is undeniable, and with the market showing no signs of cooling, now might be the perfect time to dive in.
Sources: The Portugal News, Portugal Global, Portugal Buyers Agent, Blacktower FM
16) Demand for international schools and family-friendly neighborhoods will grow as the expat community in the city expands
The city's growing expatriate community is set to increase demand for international schools and family-friendly neighborhoods. In recent years, Lisbon has experienced a significant rise in its expatriate population, attracting people from various regions, including Eastern Europe and the United States. This influx has naturally led to a higher demand for educational facilities that cater to international standards.
International schools in Lisbon have already reported increased enrollment numbers, with new schools opening to meet this demand. For example, the Carlucci American International School of Lisbon has seen a rise in interest from foreign nationals. Additionally, new institutions like The Lisboan are emerging, offering extensive capacity for students from diverse backgrounds.
Expatriate families often prefer neighborhoods that are close to these international schools, which has influenced real estate trends. Areas like Lapa, Estrela, and Campo do Ourique are becoming popular choices for families due to their proximity to educational facilities. This preference is also reflected in rising property prices in these neighborhoods, indicating a growing demand for family-friendly environments.
Sources: Essential Algarve, Portugal Buyers Agent
17) Luxury property investments in Belem will grow because of its scenic views and historical importance
In recent years, the Belem area has become increasingly attractive for luxury property investments. One of the main reasons is the rising property prices, which in 2023 averaged €6,548 per square meter, higher than the central Lisbon average. This indicates a strong demand and potential for growth in the luxury market.
Another factor is the growing interest from international investors. Portugal's luxury real estate market, including Belem, has seen robust demand due to its cultural richness, heritage, and favorable tax incentives. Experts have noted that areas like Belem are thriving because they offer a unique blend of historical charm and modern amenities, making them appealing to affluent expats and investors.
Moreover, Belem's historical significance and scenic views play a crucial role in attracting luxury property buyers. The area is home to renowned cultural landmarks such as the Jerónimos Monastery and the Belém Tower, which draw tourists and contribute to economic growth. This historical allure, combined with waterfront charm, makes Belem a prime location for luxury real estate.
Sources: Luxury Real Estate Lisbon Guide, International Property Report Highlights Portugal's Luxury Real Estate Boom, Belém | Historical Context
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.