Lisbon Real Estate Hits New Peak at €5,769/sqm, Leading Southern Europe
For foreign investors, the latest data from the second quarter of 2025 confirms Lisbon's status as a top-tier market for capital appreciation, with median housing prices climbing to a new high of €5,769 per square meter. A comprehensive report from property portal Idealista shows Lisbon remains the most expensive city for homebuyers across Portugal, Spain, and Italy, signaling a robust and resilient market for asset holders.
While cities like Madrid are closing the gap with impressive growth, Lisbon's premium valuation underscores its continued desirability for international buyers and expats. The rental market is equally strong, with Lisbon rents exceeding €22/sqm, among the highest in Southern Europe.
What Foreign Investors Need to KnowThe data reveals key growth trends beyond the capital. The city of Setúbal, just south of Lisbon, has emerged as a major hotspot, recording a massive 20% year-on-year price increase, one of the fastest rates in the region. This indicates a ripple effect from the capital and presents a significant opportunity for investors looking for the 'next big thing'. "The growth in secondary cities like Setúbal and tourist hubs like Funchal (€3,645/sqm) is a clear sign of the market's depth," commented a real estate strategist. "Investors are no longer just focused on central Lisbon; they are capitalizing on growth across the country."
Actionable Steps for Today's Buyer- Capitalize on Proven Growth: Lisbon's sustained price leadership demonstrates its role as a blue-chip asset class. Holding property in the capital continues to be a strong strategy for long-term capital gains.
- Explore Emerging Hotspots: The 20% price surge in Setúbal is a powerful indicator. Investors should conduct due diligence on markets peripheral to Lisbon and in key tourist areas like Madeira and the Algarve, where growth is accelerating.
- Analyze Rental Yields: With rents in Lisbon at €22.2/sqm and rising in tourist cities like Faro (+12%) and Setúbal (+11%), the potential for strong rental income remains high. Evaluate the yield potential in both established and up-and-coming neighborhoods.
- Benchmark Against a Wider Market: Portugal's median house price (€2,898/m²) and rental price (€16.7/m²) are the highest in Southern Europe. This premium reflects strong demand and a stable investment environment compared to neighboring countries.
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