Lisbon Housing Costs Consume 116% of Average Salary, Report Finds
A report released on Wednesday by the European Council has identified Lisbon as the European Union city where residents allocate the highest portion of their income to housing, at an average of 116%. The findings, based on data from Deutsche Bank, place the Portuguese capital ahead of Barcelona and Madrid, where the same ratio stands at 74%. The analysis, led by a team under former Portuguese Prime Minister António Costa, highlights a severe affordability challenge in the city. The study compared the cost of city-center apartments against average local salaries, revealing that Lisbon has surpassed cities with higher living standards, such as Vienna (37%), Luxembourg (34%), and Frankfurt (34%).
The report, titled “One roof, many realities: the complex housing crisis in Europe,” defines the situation as a “structural problem” affecting the entire European Union. This issue is set to be formally debated for the first time by leaders at a European Council meeting this Thursday. The data underscores a continent-wide trend of escalating housing costs, but the impact is particularly acute in Portugal. According to Eurostat, the European Union's statistical office, Portugal has experienced the second-highest surge in house prices in the EU between 2015 and the first quarter of 2025, with an increase of 147%. This is second only to Hungary, which saw a 237% rise in the same period. The EU average for house price growth was 58.33%. For investors tracking these trends, our market intelligence and analysis blog offers further insights.
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In a press conference in Brussels, António Costa, now President of the European Council, stated that the housing crisis poses a threat to Europe's economic competitiveness and could “diminish confidence in democratic institutions.” He emphasized the need for a coordinated response, even though housing policy is primarily a national competency. Costa suggested that the EU could play a role by providing member states with more flexibility to use European funds and other tools to address their specific housing challenges. This could include supporting countries that wish to invest in solutions for the short-term rental market. Understanding the regulatory and legal frameworks is crucial for anyone involved in the property sector.
The upcoming European Council discussion will explore how leaders can complement national efforts to tackle the crisis. Costa promised “diverse solutions” for “diverse causes,” acknowledging the local and regional variations of the problem. The focus will be on empowering national authorities to implement tailored solutions while leveraging the support and coordination of the EU. This high-level attention signals the severity of the housing affordability issue across the continent, with Lisbon at its epicenter. For those looking to understand the local market in more detail, connecting with English-speaking real estate agents can provide on-the-ground knowledge. Stay informed on Lisbon property market developments at realestate-lisbon.com.