Portugal sees drop in rental demand but prices remain high

Demand for rental housing in Portugal has slowed sharply in the second quarter of 2025, though prices continue to rise, according to new data from the Spanish real estate platform idealista.

Between April and June, each property available for rent received an average of 17 enquiries before being taken off the market—a 43% drop compared with the same period in 2024, when the average stood at 32. The decline is attributed to a wider availability of homes for rent rather than a fall in interest from families, Caliber.Az reports via EuroNews. 

“Despite a slight decrease in enquiries since the start of the year, rental demand remains high,” said Ruben Marques, spokesman for idealista. “The slowdown reflects an increase in available housing, but rents remain unaffordable for much of the Portuguese population.”

Portalegre tops rental demand rankings

Portalegre was the city with the highest demand in the second quarter, with each rental listing receiving an average of 53 enquiries. It was followed by Faro (33), Évora (32), Ponta Delgada (30), Santarém, Leiria and Setúbal (27 each), Funchal and Guarda (25), Castelo Branco (24), Vila Real (21), and Beja and Bragança (20).

Cities with the least demand included Viseu (18), Aveiro (15), Braga (14), Lisbon (14), and Viana do Castelo (13). Porto (8) and Coimbra (7) saw the lowest figures, likely due to higher property availability in those markets.

Compared with last year, the sharpest drops in demand were recorded in Coimbra (-73%), Porto (-62%), Viseu (-56%), Bragança (-51%), and Lisbon (-49%). Only Guarda (+40%) and Funchal (+7%) saw increases in demand.

Rents rising at a slower pace

Despite weaker demand in some cities, the cost of renting in Portugal continued to climb, albeit more slowly. In the second quarter of 2025, median rents rose by 3.5% compared to the same period in 2024.

Lisbon remains Portugal’s most expensive rental market, with average monthly rents reaching €1,751. Surrounding municipalities such as Barreiro, Vila Franca de Xira, and Amadora are significantly cheaper at around €1,200 per month, but remain among the most sought-after areas.

Of the country’s 50 most in-demand municipalities, 29 have average rents exceeding €1,000 per month, while eight surpass €1,500. The cheapest markets—Covilhã, Bragança, Chaves, Castelo Branco, and Figueira da Foz—offer rents below €750.

House prices soar above wage growth

The capital also leads in house purchase prices. Data from Portuguese real estate platform Imovirtual shows that the average price of a home in Lisbon reached €650,000 in May 2025—up 33% year-on-year, far outpacing the 4% rise in average incomes.

In northern Portugal, Porto recorded the highest prices at €395,000 (+14%), followed by Braga and Aveiro (€340,000, +15% each), and Viana do Castelo (€287,000, +13%).

Student housing costs add pressure

Rising property prices are also impacting university students. The latest Student Accommodation report from Portugal's National Plan for Housing in Higher Education (PNAES), published in July, shows the average monthly rent for a room in the private sector now stands at €415.

Lisbon is the most expensive for students, with average room rents at €500, reaching as high as €714 in some areas. Porto follows with €400, Braga with €323, and Coimbra with €280.

By Sabina Mammadli