Updated: November 8, 2024
Renting a property in Portugal in 2024 has become more expensive in almost all major cities in the country when compared with the previous year – house prices have increased by 9.1 percent in one. This includes rental property prices going up in Lisbon and Porto, which have experienced price increases of 8.1 percent and 12.3 percent, respectively.
Should you own a property in Portugal or be looking to invest in an investment property, increasing rents means that you could score a strong return on your investment as demand continues to soar.
Understanding the Current Rental Market
At the beginning of 2024, the Portuguese rental market experienced a notable increase in those seeking rentals, which can be seen in the annual rise in the number of new lease contracts. However, the shortage of housing supply and increased demand led to an increase in rental prices in the country.
According to the Idealista Price Index, renting a house in Portugal has a median cost of €16.3 per square meter as of July 2024, while if you take a look at the quarterly variation in prices, house rents increased by 1.6 percent.
Rental Property Prices Rise in Almost All Key Cities
Rental properties have become more expensive almost across the board in the past year, going hand in hand with Portugal’s continued popularity leading to increased rental housing demand. According to the Portuguese National Statistics Institute (Institute National de Estatística), Portugal’s population has been increasing in recent years and has a positive net migration of 155,701.
Looker closely at Portugal’s rental market, the most significant rent increases were in Coimbra, which experienced an 18.3 percent increase, and Viseu and Faro, which experienced price increases of 14.3 percent and 13.7 percent, respectively.
Increases in rental prices were also seen in the following cities:
- Braga: 11.9 percent
- Castelo Branco: 11 percent
- Setúbal: 8.4 percent
- Lisbon: 8.1 percent
- Leiria: 7.6 percent
- Funchal: 5.2 percent
- Aveiro: 4.4 percent
- Santarém: 4.2 percent
Rent increases were not, however, universal across the entire country with house rents decreasing in Évora (-3 percent) and Viana do Castelo (-1.5 percent) over the same timeframe.
Where is it most expensive to rent in Portugal?
It should come as no surprise that Lisbon remains the most expensive city to rent a house in Portugal, where a property will cost €21.7 per square meter, followed by Porto (€17.4 per square meter) and Funchal (€14.1 per square meter).
Following this were the following cities:
- Faro: €12.7 per square meter
- Setúbal: €11.9 per square meter
- Aveiro: €11.7 per square meter
- Évora: €11.3 per square meter
- Coimbra: €11.2 per square meter
On the other side of the spectrum, Castelo Branco is the most affordable major city to rent property, where it costs €6,5 per square meter, with other notable affordable cities including Viseu (€7.3 per square meter), Viana do Castelo (€8.1 per square meter), Leiria (€8.2 per square meter), Santarém (€8.3 per square meter), and Braga (€9.1 per square meter).
Rent Increase Portugal: Price Increases per District
Renting in Portugal has become more expensive almost across the board. When looking at rental price increases over the past year on a regional level, real estate rental prices have increased in five regions of Portugal. The North of Portugal experienced the greatest rent hike price increase (12.6 percent), followed by the Center (11 percent), Greater Lisbon (8 percent), the Algarve (5.1 percent), and the Alentejo (4.3) percent. In the autonomous island of Madeira, however, prices remained stable, with a marginal increase of 0.5 percent).
Greater Lisbon remains the most expensive region in Portugal to rent a property (€19.3 per square meter), followed by the Algarve (€14.3 per square meter), the North (€14.1 per square meter) and Madeira (€13.6 per square meter). The Center and the Alentejo regions remain the most affordable, where a rental property will set you back €9.3 per square meter and €9.9 per square meter, respectively.
Investing in a Rental Property: A Smart Move for Investors
As property prices continue to increase in key cities in Portugal, this presents an opportunity for property investors to secure a nice return on their investment.
Foreign direct investment (FDI) in Portugal came to 4.1 billion euros in the first half of 2024, with 1.6 billion euros of this being attributed to real estate.
Should you choose to invest in a rental property in Portugal, you will find high rental yields. Below, you can find rental yields in key areas in Portugal from the third quarter of 2023.
Location | Rental Yield (%) |
Lisbon Metropolitan Area | 6.7 |
Porto Metropolitan Area | 6.0 |
Cascais | 5.6 |
Algarve | 5.6 |
Sintra | 6.3 |
Setúbal | 7.7 |
Vila Nova de Gaia | 5.9 |
Matosinhos | 6.1 |
Both long and short term rentals in Portugal are profitable ventures. While short-term rentals have long been cornerstones of the Portuguese economy, given Portugal’s booming tourism sector, long-term rentals have increasingly moved into the spotlight, requiring less maintenance than short-term rentals. Expats from all walks of life are seeking out properties to rent out long-term, including students, remote workers, families, and tech professionals.
Important note: There are restrictions on property owners obtaining new Alojamento Local (AL) Licenses. This is a license that is required to rent out certain property types in the short term. However, the Portuguese government has stated that it is currently reviewing certain restrictions placed on investors under the More Housing Bill (Mais Habitação) that was passed in October 2023. AL Licences are not required for long-term rentals.
To find out more about the current state of play, you can check out our article on the topic here: What is Changing Regarding Portugal’s Short-Term Rentals?
And, if you are considering renting out property in Portugal, you can consult our Ultimate Guide to Renting Out Your Property in Portugal.
Top reasons to invest in Portugal
Portugal’s stunning climate, high quality of life, and rich cultural heritage have long attracted tourists and expats to the country.
Some of the key reasons to consider investing include:
- Strong rental yields
- Dynamic and resilient property market
- A wide range of property types
- Blossoming tech and business hub
- Portugal the seventh safest country in the world, according to the 2024 Global Peace Index
- English widely spoken
- Booming tourism sector
Interested in investing in Portugal’s real estate market? Check out our ultimate guide.
