An Overview of Real Estate prices in Lisbon over the last Five Years
Over the past five years, Lisbon has seen remarkable real estate price growth for property purchases and rentals. This trend has been driven by various factors, including increased demand from international buyers, local investment, urban revitalization, and Portugal’s Golden Visa program, which attracted foreign investors.
Purchase Prices
From 2018 to 2023, property purchase prices in Lisbon surged. In 2018, the average cost per square meter was around €3,100. By 2023, this figure reached approximately €5,000 per square meter, marking an increase of over 60%. In prime neighborhoods like Chiado, Baixa, and Avenida da Liberdade, prices have even surpassed €10,000 per square meter.
Several key factors contributed to this rise:
Foreign Demand: Portugal's Golden Visa program previously fueled demand by granting residency through real estate investment. However, as of 2024, Portugal has removed real estate investment options from the program to address housing affordability concerns and refocus on sustainable investment types, such as job creation and scientific research. While this change may slightly temper foreign demand for Lisbon properties, existing interest remains high, especially among buyers from countries outside the EU who value Portugal’s lower cost of life, lifestyle, and favorable tax policies.
Local Market: Portuguese buyers continue to drive demand, benefiting from historically low interest rates, though rising rates from the European Central Bank may begin to moderate borrowing.
Urban Renewal Projects: The city’s focus on revitalizing areas, especially along the waterfront and former industrial zones, has transformed these districts into trendy, high-demand residential areas, driving up property values.
Tourism Boom and Short-Term Rentals: The rise in tourism and platforms like Airbnb made Lisbon real estate attractive for short-term rentals. Many properties were purchased to rent out short-term, adding upward price pressure. Following new regulations in Portugal, no new short-term rentals, such as Airbnb, are allowed in touristic zones, reflecting the country's efforts to control housing costs and preserve residential areas for locals.
Rental Prices
Rental prices have closely mirrored the surge in purchase prices. In 2018, the average monthly rent in Lisbon was approximately €11 to €13 per square meter. By 2023, this figure rose to around €17 to €20 per square meter. For example, renting a 100-square-meter apartment in central Lisbon could cost between €1,700 and €2,000 per month, depending on the neighborhood.
Several factors drove this rental increase:
Short-Term Rental Demand: As tourism grew, many property owners shifted to short-term rentals, which are more profitable than long-term leases. This shift reduced the supply of long-term rental housing, pushing up rental prices.
Gentrification of Previously Affordable Neighborhoods: Areas like Alfama, Graça, and Bairro Alto have experienced gentrification, with renovations and increased foreign investment driving rental costs upward.
Demand from Expats and Digital Nomads: Lisbon has become popular among expats, remote workers, and digital nomads, often willing to pay premium rents, especially in central and trendy neighborhoods.
Government Regulation: Although the Portuguese government introduced measures to curb rent hikes, such as rent caps for older tenants, these efforts have had limited impact on the overall market. High demand continues to drive prices in central areas.
Outlook
While Lisbon’s real estate market has experienced rapid growth over the past five years, analysts now predict a potential stabilization or slight price decrease due to external factors like rising European Central Bank interest rates, which affect borrowing costs. Nevertheless, demand from both local and international buyers remains high, suggesting any slowdown may be gradual. Additionally, global investors’ and expatriates' interest in Lisbon will likely keep the market resilient.
In summary, Lisbon’s real estate market has experienced exceptional growth in both purchase and rental prices, driven by high demand, foreign investment, and urban development. Although price increases may slow, Lisbon remains a beautiful destination for buyers and renters seeking property in one of Europe’s most dynamic cities.
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