Tourists stay in short-term rentals and foreigners buy second homes, while residents of the city rent rooms, not apartments
In this series, writers discuss the causes of – and solutions to – the housing crisis in key European cities
Over the past decade, Lisbon has undergone a dramatic transformation – from one of the most affordable capitals in Europe to the most unaffordable.
Between 2014 and 2024, house prices in the city rose by 176%, and by more than 200% in its central historic districts. The home price to income ratio, a key indicator of housing affordability, reflects this shift with stark clarity: today, Lisbon tops Europe’s housing unaffordability rankings. This trend extends to the national level. In 2015, Portugal ranked 22nd out of 27 EU countries for housing unaffordability. Today, it ranks first. In a country where 60% of taxpayers earn less than €1,000 a month, finding a rental below that price in the Portuguese capital is only possible if you’re willing to live in 20 sq metres – or less.
To understand how Lisbon reached this point, we need to look back to the years following the 2008 global financial crisis. As part of its shock plan to revive the economy, Portugal embraced a strategy of aggressive liberalisation, aiming to put Lisbon – and the country – on the global map for real estate investment and tourism. The government implemented a familiar neoliberal formula: rental laws were relaxed, making evictions easier and tenancy agreements shorter; generous tax incentives were introduced for non-resident buyers, including the now controversial “golden visa” and “non-habitual resident” programmes; and investment funds were actively encouraged to enter the property market, benefiting from additional tax exemptions.
