The housing affordability ratio in Lisbon is 18.7. By comparison, this figure is 17.0 in Paris and 16.0 in London. Economists note that a figure above 10 is already considered a sign of serious housing affordability problems, according to Euronews.
The sharp rise in prices was the result of a long-standing imbalance between supply and demand. According to Global Property Guide, housing prices in Portugal have risen by nearly 240% over the past ten years, while average wages have increased by only 59%.
Today, a square meter of housing in central Lisbon costs about 6,800 euros. A small 50-square-meter apartment is valued at approximately 338,000 euros, which is equivalent to nearly 19 times the average annual income of a city resident.
In its 2026 economic review of Portugal, the Organization for Economic Cooperation and Development (OECD) ranked the country among those with the lowest levels of housing affordability among developed economies. Key reasons cited include insufficient construction volumes, limited supply in the rental market, and regulatory barriers.
According to estimates by industry organizations, Portugal needs to complete 45,000–50,000 new houses and apartments annually, but in reality, only about 25,000–30,000 are actually being built. Furthermore, social housing accounts for about 2% of the country’s housing stock—one of the lowest rates in Europe.
Rising prices have already led to mass protests. Since 2023, theCasa para Viver(“Homes for Living”) movement has been holding regular demonstrations demanding an expansion of the affordable housing stock, a cap on rent increases, and the use of vacant buildings.
Despite the worsening housing affordability, analysts do not expect a market collapse anytime soon. The Bank of Portugal notes that the supply shortage continues to support prices, while current restrictions on mortgage lending reduce the risk of a classic speculative bubble forming. For its part, BPI Research has raised its forecast for housing price growth in the country in 2026 to 11.7%.
It is noted that high demand, limited supply, and interest from foreign buyers will continue to support real estate values; however, the gap between prices and household incomes continues to widen.
