Housing and Food Costs Drive Over 15,000 Portuguese Families into Debt in First Half of 2025

Lisbon's High Rents Fueling Household Debt, Reveals New Report

A new report from Portugal's consumer protection agency, Deco, has revealed that soaring housing costs are a primary driver of over-indebtedness, with over 15,000 families seeking financial help in the first half of 2025. For foreign investors in the Lisbon rental market, this data provides a critical look at the financial health of the tenant population.

The report highlights a significant trend: families are increasingly taking on personal loans not to buy property, but to cover monthly rent and security deposits. This indicates that the high rental prices in urban centers are pushing local tenants to their financial limits.

Natália Nunes of Deco's Financial Protection Office states, "there is a significant number of help requests related to rent." This is a direct consequence of the rental price surge. While high rents generate strong yields for landlords, the report's finding that the average indebted family holds six loans signals a potential risk. A tenant base that is heavily leveraged may be more susceptible to defaulting on payments if faced with unexpected financial shocks.

• Tenant Screening: Implement rigorous financial checks during the tenant selection process to mitigate the risk of arrears.
• Market Sustainability Analysis: While current rental yields are attractive, consider the long-term sustainability of rent levels in your investment models. A market correction could be possible if tenant affordability continues to decline.
• Diversify Your Portfolio: Consider investing in areas with a more balanced rent-to-income ratio to spread risk, rather than focusing solely on the highest-priced central Lisbon neighborhoods.
• Maintain a Cash Buffer: Ensure you have sufficient liquidity to cover mortgage payments and property expenses during potential vacancy periods or if a tenant falls into arrears.

This report underscores the importance of looking beyond yields to understand the underlying economic stability of your target market. Explore opportunities with realestate-lisbon.com.