Portugal

Portugal’s housing crisis is marked by rapidly rising prices and a mismatch between wages and housing costs. In 2025, house prices have surged by over 16% year-on-year, and rental markets are under particular strain in Lisbon and Porto, where rents far exceed national averages. Despite a seemingly high number of dwellings—more than 550 per thousand inhabitants and nearly 6 million homes for 10.5 million people—a significant proportion remains vacant or used as secondary homes. This paradox means that while supply seems abundant on paper, much of it is unavailable or unaffordable for most residents. The most affected are low-income families, with more than half the workforce earning under €1,000 per month. Young adults and working families in cities find themselves priced out, often forced to live with relatives. Older adults also face difficulty: studies show 28% of seniors are spending over 40% of their income on housing, leading to insecurity and negative health outcomes. Gentrification in urban areas has displaced long-term residents, with social and mental health impacts, while the elderly, renters, immigrants, and those on fixed incomes bear the brunt of the affordability crisis. Regional disparities are stark: Lisbon and the Algarve see the highest pressures, largely due to demand from affluent buyers and tourism, alongside a sharp decline in new construction in these areas. In sum, Portugal’s housing crisis is both a problem of affordability and accessibility, hitting vulnerable groups and urban populations hardest.

Portugal's national government has responded to the affordable and sustainable housing crisis with a comprehensive strategy, “Construir Portugal: Nova Estratégia para a Habitação.” The main objectives include increasing housing supply, supporting affordable rental and home ownership, and promoting sustainability. Recent targets aim to construct and renovate tens of thousands of homes: under the Recovery and Resilience Plan, 25,000 homes are to be made available, while the Affordable Housing Expansion Program plans for 33,000 additional affordable units by 2030, with a €2.22 billion budget. Key measures include facilitating construction on rustic land through legal changes that allow rural land to be reclassified for affordable and public housing. The government has also introduced IMT (property transfer tax) and stamp duty exemptions for young buyers under 35 years old, up to €316,000. The “Porta 65 – Jovem” and "Supported Rent” programs provide rental subsidies for young people and low-income households, while the “1º Direito” program supports the rehabilitation of housing for vulnerable groups. A €2 billion “Mais Habitação” initiative (since 2024) bundles 30 specific measures, streamlining licensing, incentivizing private development, and offering subsidies to keep rent burdens below 30% of income for low-income families. There are also government guarantees and fiscal incentives for first-time young buyers. All programs increasingly integrate sustainability, with new developments required to meet modern energy efficiency and ecological standards.

Housing cooperatives in Portugal represent a minor segment of the national housing market, with their presence not exceeding a small fraction of total housing units. There are no precise recent figures, but various reports and experts note that the sector remains marginal compared to mainstream owner-occupancy and rental markets, and significantly lags behind the scale seen in some other European countries. Most existing cooperatives are small and face challenges, especially regarding financing and project development. Recent years have shown some renewed interest and positive demographic trends within the cooperative sector, with more new cooperatives being created and a positive overall balance, though the number of dissolutions remains high. Nevertheless, housing cooperatives account for only a minimal share of the total number of cooperatives formed in Portugal, being overshadowed by areas such as culture and agriculture. The national government has acknowledged the potential of cooperative housing in increasing affordable supply, especially in the face of the ongoing housing crisis. Initiatives include proposals for state-backed credit guarantees for cooperative construction, the allocation of public land, and budgetary support through programs like “Construir Portugal.” However, delays in regulatory and financial mechanisms—such as credit lines and frameworks for cooperative participation—have hampered sector development. Some political parties have also proposed pilot programs and funding streams to support non-profit cooperative housing, although these policies are still in early stages and largely unimplemented.

Portugal’s housing market in 2025 is experiencing record price growth, with home prices rising 16.3% year-on-year—among the highest increases in Europe. As of June 2025, the median purchase price is around €2,900 per square meter nationwide, though Lisbon and the Algarve often exceed €4,000 per square meter. The national median rental price is €7.97 per square meter, but in Lisbon it reaches €15.93 per square meter and €12.58 per square meter in Porto, illustrating regional disparities. Home ownership in Portugal remains high, and only about 22-25% of the population rents, placing Portugal among the EU countries with the highest rate of owner-occupancy. The share of public or social housing is very low, accounting for just 2% of the total housing stock. Recent government measures aim to increase this percentage, for example by allowing social housing construction on rustic land, but supply remains limited. Public housing and social housing are effectively the same in Portugal, both referring to dwellings provided at below-market rents to low-income households or those meeting specific criteria. Publicly owned (municipal or state) housing is nearly synonymous with social housing in the national and Lisbon context; the two terms are not meaningfully differentiated in policy or practice. In summary, Portugal’s housing market is characterized by a sharp rise in prices, high owner-occupancy, relatively low rental rates, and public/social housing comprising only a very small fraction of the market.