foreign investment
Prices for living space across continental Portugal have surged, pushing both buying and renting costs higher and tightening budgets for families already contending with rising inflation. Data from Confidencial Inmobiliario show that purchase prices rose 18.7% in December 2022 year over year, marking the steepest annual jump in three decades for the mainland market. Rental prices, while also climbing, did so with a bit more restraint. Lisbon, in particular, stands out, with rents now higher than in many other major European cities such as Madrid.
Several factors drive the surge in purchase prices, including elevated construction costs spurred by material shortages and rising interest rates. While this pattern affects Europe broadly, Portugal experienced a more pronounced increase in home prices than the euro area average. Eurostat indicates Portugal saw a 13% rise in the third quarter of 2022 versus the same quarter a year earlier, compared with a 6.8% gain across the Eurozone. These figures reflect structural dynamics in the Portuguese housing market, where demand outpaced supply in many urban centers.
empty houses
Imbalances between supply and demand also shape the rental market. Last year, Lisbon rental prices climbed 36.9%, according to Casafari, a specialist in European real estate data. Recovery in tourism after the pandemic pushed many properties back into the short-stay market, intensifying pressure on long-term rentals. The Lisbon City Council estimates there are roughly 48,000 vacant properties in the capital, with about 2,000 owned by the municipality itself. These vacancies reflect a mix of owners who hesitate to rent due to perceived legal delays, and properties that require significant repairs before they can be rented out. The European Union has provided a 2.7 billion euro bailout fund to support housing policies, but challenges persist as vacancies remain high and access to affordable housing remains a central concern for residents. APEMIP, the Portuguese Association of Realtors, cites ongoing issues with trust in the housing market and the fiscal environment, noting that many vacant homes are not viable without substantial investment just to bring them up to livable standards.
public policy
Efforts by the government and local authorities to improve housing access have yet to produce a clear balance between supply and demand. Economic researchers and policy makers describe a cautious environment among property owners about renting, driven by concerns over regulatory changes and taxation. There is a fear that new measures could lead to greater tax burdens or regulatory control, discouraging owners from listing properties. In response, the premier announced a plan to advance a new housing law that will expand developable land and introduce tax incentives aimed at encouraging owners to put properties on the rental market. The Housing Minister indicated that this policy framework will accompany a broader public housing program and is expected to be ready before the end of the first quarter. As the market evolves, stakeholders emphasize the need for practical, efficient enforcement and reliable rulemaking to stabilize housing access for families while maintaining property rights. The goal is a robust, scalable solution that supports mass housing stock while safeguarding market confidence for both citizens and investors.