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Rents up, house prices down

Atualizado: 17 de mai.

A week after the Government presented its new housing strategy, "Construir Portugal: Nova Estratégia para a Habitação", new data painted a contradictory picture of the Portuguese real estate market.

On the one hand, new National Statistics Institute (INE), data showed that house rents per square meter increased by 7.1% in April compared to the same month in 2023, when in the previous month the increase was 6.9%, and with all regions showing year-on-year growth.

According to the INE, in April "all regions showed positive year-on-year variations in housing rents, with Lisbon registering the most intense increase (7.4%)".

The effective rents paid per tenant have been rising in monthly terms since July 2020.

In monthly terms, the average value of housing rent per square meter registered a variation of 0.6% (0.9% in the previous month).

The region with the highest positive monthly variation was Lisbon (0.7%), with no region being observed with a negative variation in the respective average value of housing rents.

On the other hand, INE also revealed that the average cost of all homes sold in the final quarter of 2023 was 1,619 euros per square metre (euros/m2), 7.9% more than in the same period last year. But compared to the previous quarter, house prices in Portugal fell by 1.3%, a trend felt in 14 of the 24 most populous municipalities, including Lisbon and Porto.

"In the fourth quarter of 2023, the average price of family dwellings in Portugal was 1,619 euros/m2, corresponding to a year-on-year rate of change of 7.9%," INE said in the bulletin published on Tuesday 23rd April. From the outset, it's clear that house prices have slowed down, as the year-on-year change is lower than that recorded in the previous quarter (10.0 per cent).

But compared to the previous quarter, there was actually a correction in the prices of houses sold in Portugal. The average price of 1,610 euros/m2 recorded in the last quarter of 2024 represented "a decrease of 1.3% compared to the third quarter of 2023, reversing the upward trend that had been in place since the fourth quarter of 2022", the Portuguese statistics office reveals.

New Housing Strategy

Last Friday, just over a month after taking office and two days after Parliament voted down its attempts to repeal the previous Government's Mais Habitação ("More Habitation") plan, Luís Montenegro's Executive presented its own housing strategy.

Prime Minister Luís Montenegro said that the new housing strategy, which includes 30 measures, aims to "restore confidence" among the Portuguese, unlike the previous government's programme, which "was still in gestation and had already been condemned to failure".

The Government recognised that this is a “generational challenge” that cannot only be resolved in the short term, but that “requires an immediate response”.

However, the National Landlords' Association (ANP) considered that the measures announced by the government for housing do not address the "truly important issues", emphasising that with regard to urban rentals "it seems that there is a lack of knowledge of the matter".

The new plan, called Construir Portugal ("Build Portugal"), includes 30 measures to provide an "immediate response" to the housing supply crisis, which it says is "fuelling a worrying division in society", spread across six areas of activity.

Read them here:

Boosting supply

  • Making public housing available (build to rent) with affordable rent/price, under a Public-Private Partnership regime (90 days);

  • Semi-automatic legal regime for the use of vacant or underused public properties through a case-by-case presentation of a housing project, to be carried out by municipalities and, if necessary, with private partners (10 days);

  • Amendment of the land law to allow the use of rustic land for sustainable housing solutions (at controlled costs, for affordable rental, for temporary accommodation or offer for function houses for teachers, security forces, agricultural and industrial workers and the tourism sector (60 days);

  • Creation of construction bonuses to increase urban density indexes and limits in cost-controlled housing projects, affordable rentals or temporary accommodation (90 days);

  • New urban centers surrounding areas of urban pressure, with sustainable urban plans and in coordination with transport provision (study in 120 days);

  • State guarantee on credit for the construction of cooperatives with delivery of public land (90 days);

  • Lines of credit to promote build to rent (60 days);

  • Pact with sector agents to increase construction capacity, involving stability of production capacity, industrialization of the process, and attraction and qualification of resident labor;

  • Reduction of VAT to the minimum rate of 6% for rehabilitation works and housing construction, with limits depending on prices (until the end of the legislature);

Promoting public housing

  • Unblocking 25,000 houses from the Recovery and Resilience Plan (PRR) with the adoption of a liability term from municipal councils, in order to speed up processes (10 days);

  • Reinforcement of financing to enable the development of thousands of other candidate homes, but not financed in the PRR (30 days);

  • Strengthen the promotion capacity of the IHRU, through EPE Public Construction (formerly School Park), in carrying out the Affordable Rental Program buildings (10 days);

Return confidence in leasing

  • Revocation of forced tenancy, respecting property rights (10 days);

  • Revocation of the Mais Habitação measure guaranteeing and replacing the State as tenant (30 days);

  • Correction of the distortions introduced to the Urban Rental Regime in the last eight years to restore flexibility and confidence to the rental market (appoint a working group);

  • Creation of the investment contract for build to rent and available to let;

Legislative simplification

  • Enable the creation of one or more insurance contracts through a provider other than the lender's preference, promoting healthy competition in the market;

  • Review of the Urbanistic Simplex, with regulation, deepening and improvement of legislation to reduce bureaucracy and urbanistic administrative simplification (90 days);

  • Approve the Construction Code;

  • Implementation of the use of the BIM (Building Information Modeling) methodology and bringing municipal licensing platforms closer to the interface with economic agents (120 days);

  • Adapt the concept of controlled costs and affordable income to reflect the affordable housing segment in each location and moment, generating greater predictability and longevity in the market (120 days);

  • Revocation of the Extraordinary Contribution on Local Accommodation (CEAL), the expiry of the license and transferability, and the change to the aging coefficient, decentralizing regulation to the municipalities (10 days);

  • Creation of the IHRU (Housing and Urban Rehabilitation Institute) Portal to monitor application processes with the aim of reinforcing transparency (120 days);

Promote young housing

  • Public guarantee for young people to enable bank financing when purchasing their first home (15 days);

  • Exemption from IMT and Stamp Tax on the purchase of the first home for young people up to the age of 35 on properties up to the 4th IMT bracket, that is, up to 316 thousand euros (15 days);

  • Reformulation of the Porta 65 rental support program, to “put young people’s economic reality first”, putting an end to exclusions based on rent limits (15 days);

  • Emergency Program for Student Accommodation (15 days):

  • Implementation of the “National Accommodation Plan 2025-26” for students, with the offer of an additional 18 thousand beds (30 days);

Ensuring accessibility to housing

  • Streamlining income subsidy programs, eliminating restrictions, particularly on expiries (30 days);

  • Creation of a transition regulation between supported income and affordable income, in order to ensure that there are no discontinuities in support (120 days).

The full strategy is also available here (in portuguese):

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