The rent situation in Portugal

2025-10-12

I ranted more than a few times, to more than a few people, about the rent situation in Portugal. It's the only reason I'm leaving Portugal and going back to Brazil too, as the cost of living hasn't changed that much around here despite COVID and the Russian invasion of Ukraine. There's not much you can do when, to keep a roof over your head, you have to either overwork or share housing with other people¹. Without an address, you lose access to a lot of services — especially because Portugal loves sending physical mail instead of just using email.

So, straight to the point: what I think is causing the housing bubble in Portugal?

The answer is: overtourism².

And let me be clear: when I talk about the housing bubble in Portugal, I'm talking about the whole country, not just Lisbon or Porto. Can you find housing with lower rent in the Portuguese countryside? Yeah, for sure, but it's still 2x more than what it was 5 years ago, and you have to have a car and spend money on maintenance — there's an annual mandatory inspection — and gas, otherwise you won't be able to access any service because public transit is non-existent outside the larger cities. If you do the math, it ends up being the same as paying the overpriced rent near a large city.

Another thing here is not that the existing housing is just more expensive, but that there is basically no housing available. I live in a city with ~130k people and, if I open any website to check for what my options are for renting, there will barely be more than 10 apartments or houses at any given time, with higher rent than I currently pay. For a city of this size, that's absurdly low. And in a larger place, like the Porto conurbation area, most of what's available are single-room apartments with 10-to-20m², but with rent costing 50~70% of the minimum wage. The options end up being "none or a shoebox". And that's not even accounting for how bad the insulation is in most places around here.

So, what the hell happened?

"Airbnbs" happened.

To be clear, the issue here is not the company Airbnb (although they did help make things worse), but how the system for short-term rentals works, called "Alojamento Local", or "AL", for tourists and whatnot. Anyone who has been to Portugal and didn't stay at a hotel must've seen the small plaques in front of the place they were staying, or in front of random buildings while walking around. This is, essentially, a licensed way for non-touristic places to rent short-term for tourism. Which means that each town has legally approved every one of these places. And ever since Portugal started winning "Best European destination" or "Best country to visit" awards and whatnot, the amount of ALs went through the roof, as they bring a lot of money without too much risk... as long as you own a building.

It's hard to find exact figures online without spending a lot of time criss-crossing information, but I did find a map for the city of Porto with the current situation. Just check this out.

Source here.

You see those percentages? That's how much of the local housing is being used as "Alojamento Local". Two subdivisions are about 40%, one is around 50%, and another one is over 60%. The other parts of the city seem ok, but the percentage has been rising since 2022 (the table on the right). It's worth noting that the threshold to go from blue to red is 15%, but I still think 15% is too high. If 15% of a typical European neighborhood is being devoted to housing tourists, you can bet it would be enough to disrupt the non-touristic part of the commerce that exists in that area.

But also, check the raw numbers: the first one (Nº Habitação) is how much housing exists, and the second one (Nº Estab. de AL) is how many of them are Airbnbs. This means that, in a city of ~250k people living in an area of ~41km², there are ~10,000 houses and apartments reserved for short-term rentals only. Considering that families are made of anywhere from 1 to 4 people (more is rare, but it exists), that would be ~20k to ~30k working-class people not being able to live in Porto while working in the area.

Just imagine how much pressure this puts in the local rental market. Even worse, people who are forced out move to neighboring cities, raising the rental pressure there, making people there move even further away, and so on. All the while, the number of ALs keeps rising everywhere, and I really mean everywhere, not just in Porto. There are companies and investors buying a lot of buildings just to turn them into airbnbs and whatnot, while the far-right blames the "excessive number of immigrants" for this — even though the population of Portugal barely changed since the 2000s, so it can't be the immigrants causing all of this.

When I moved to Portugal, 8 years ago, the housing bubble was just warming up, but I thought, "hey, this is a functional democracy with a working government that had great success implementing tons of social policies, so this won't go rampant". Man, how wrong I was. The government just let it run wild, because tourism brings a lot of money.

My guess about what happened? The authorities are afraid of losing investment if they try to regulate short-term rentals, while at the same time, I wouldn't find it surprising if politicians have connections with the real estate market, considering how small the country is and how "everyone seems to know everyone". There are places in Lisbon and Porto where the rent is as high as in Germany or the Netherlands, but the Portuguese wage is 1/3 or 1/4 of those countries, so things definitely aren't looking good.

The saddest part? The mortgage for a financed house is lower than rent, but with rent the way it is now, it's hard to save money for the down payment — a requirement after 2008, funny enough. But, buying prices have also been rising, so who knows for how long that will still be an option for people who manage to scrape enough savings.

So, yeah, that's why I'm leaving. I'm lucky, I work online and can easily move back to my country. It's annoying and expensive, but it's doable and, I kid you not, cheaper than moving to another apartment here in Portugal. If I worked on-site or in-office here, though? Not sure about what I'd do. Most people are between a rock and a hard place, Portuguese and immigrants alike, and I feel for them.

Tourism is good and all, but it's not your typical industry, so if the officials in charge don't do something, things always go out of control for the working class, while a few lucky people get even richer. I do hope to return someday, but I don't think the Portuguese government really wants to meddle with the money that short-term rentals are bringing, so I don't see the situation changing any time soon.

#portugal #rambling