Portugal

Portugal’s housing market in 2025 is defined by strong price growth and persistent supply constraints. Home ownership remains high, with about 73–76% of Portuguese households owning their homes, while around 26.6% rent—the rental share is below the eurozone average. The median price per square metre to buy an apartment nationally is approximately €2,105, but asking prices are higher, averaging €2,851, and reach €5,720 in Lisbon. Monthly rents average around €16.6 per square metre nationally, with higher rates in prime urban and coastal regions.

Publicly owned housing plays a minimal role, accounting for roughly 2% of homes nationwide. The stock for social rental housing is even lower at just 1.1%, among the lowest in the OECD, with around 63,000 social rental dwellings. In Portugal, public housing is primarily synonymous with social housing: both are overwhelmingly municipally or state-owned and targeted at low-income or vulnerable households, often at rents calculated by income. However, public housing can sometimes refer more broadly to any government-owned housing, while social housing specifically targets those in need with strict eligibility and reduced rent. The sector is under considerable strain given demand and has limited impact on overall housing affordability.

Portugal faces a significant housing crisis marked by rapidly rising prices and severe shortages in supply, especially in cities and tourist regions. In April 2025, residential property prices increased by nearly 17% year-on-year, with the average price nationally hitting €1,866 per square meter, while Lisbon topped €5,720 per square meter—making housing unaffordable for many. Annual price growth has remained consistently high, driven by strong demand, a lack of new construction, and prioritization of the luxury segment.

Urban hubs like Lisbon, Porto, and the Algarve experience the steepest price increases, resulting in pronounced affordability issues for local residents. The crisis is felt most acutely by the country's renters, young adults seeking to leave their parents’ homes, lower-income families, and vulnerable populations who struggle to secure decent housing. The lack of social housing, with only 2% of dwellings classified as public and just 1.1% as social rental units, means state-supported options are virtually absent for most. Supply constraints are so severe that leading banks and experts warn the crisis is becoming "unsustainable," with demand massively outstripping new supply due to limited development, high construction costs, and administrative bottlenecks.

The brunt of the housing crisis falls on those unable to buy or afford high rents, including the youth, urban working class, immigrants, and disadvantaged groups across Portugal.

Portugal’s government, under Prime Minister Luís Montenegro, has launched an ambitious housing policy centred on expanding affordable and sustainable housing via the “Construir Portugal” framework. Key communicated targets include delivering 59,000 new homes by 2030, funded through €4.2 billion in combined state and EU Recovery funds; 36,000 of these will receive full funding, with the remainder covered up to 60%.

Main activities and programs to create affordable, sustainable housing are:

• Accelerating construction, rehabilitation, and acquisition, with an emphasis on urban regeneration and public-private cooperation for redeveloping vacant state buildings.
• Simplifying and speeding up licensing and planning procedures, especially in newly designated urban expansion zones.
• Lowering taxes and fees: VAT on residential construction and rentals is reduced to 6% for homes under €648,000 and rents up to €2,300 through 2029. Income tax rates for moderate rents have dropped from 25% to 10%.
• Expanded rental support: tenants can deduct up to €1,000 in rent from taxable income; public guarantee programs for young buyers (aged under 35) have €1.55 billion in backing, covering up to 15% of mortgage value.
• Modernising construction with a focus on innovation and sustainability, and allowing rural land conversion for new housing.
• Revamped “1.º Direito” funding scheme aims to rehabilitate existing stock, with 70% of new social housing from renovations. These measures aim to boost supply, stabilise prices, promote sustainable development, and restore market confidence, with special attention to young people, families, and vulnerable groups across Portugal.

Housing cooperatives in Portugal have a long history but today represent a small share of the national housing stock, with their economic weight shrinking in recent years. As of 2020, the added value of housing cooperatives accounted for only 0.1% of the national total, a notable decline from earlier years. Most cooperative homes are owned collectively by the cooperative itself, granting residents use rights rather than individual ownership; this model supports affordability but limits capital gains for members. The sector experienced both expansion and decline over the past decades, with a rebound now emerging due to renewed policy attention.

Recent public strategies acknowledge cooperative housing as a promising means to provide affordable and accessible homes. The Constitution and the Basic Housing Law both highlight the role of cooperatives, and new legislative reforms are being prepared to modernize the regulatory framework. The government is developing financial instruments to encourage cooperative-led projects, such as state-backed loans and the allocation of public land for non-profit housing, as announced in the "Construir Portugal" program. However, implementation delays—particularly in securing financing—have slowed progress and prevented significant sector growth. Overall, cooperative housing remains marginal but is increasingly prioritized in Portugal’s national and local housing agendas as a tool to counteract the current housing crisis. Quantitative data on their current share in total housing units is unavailable but is consistently described as modest.