Portugal housing market sees rental decline amid persistent home price pressure

Rental prices in Portugal fell 2.9% in May 2025, marking the fourth consecutive monthly drop, according to the idealista price index. The median rent reached €16.3 per square metre, while Lisbon remained the most expensive city at €21.8/m². Regional data showed mixed trends, with Viana do Castelo, Castelo Branco, Faro and Funchal registering annual rent increases, while Viseu, Porto, Lisbon and Braga saw declines.

A DBRS analysis released the same day warned that Portuguese house prices are likely to stay high. The agency cites slow construction activity, rising building costs (up 4.7% YoY in February 2026) and limited supply as key factors. Although demand stays robust, especially with public‑guarantee mortgage schemes, the report flags increased credit‑risk for such loans and cautions that higher interest rates could strain borrowers’ ability to pay.

Overall, the Portuguese housing market is characterised by falling rents, sustained high property values and growing concerns over mortgage affordability.