EU Council Report: Portugal Housing Prices Jump 147% in a Decade, Lisbon Rental Market Under Extreme Pressure
The Council of the European Union has released a new report identifying a structural housing crisis across the bloc, with data showing an average price increase of 60.5% between 2015 and 2025. The document, prepared for the first formal European Council discussion on housing, highlights Portugal as one of the countries with the most significant escalations, recording a 147% rise in housing prices over the decade. This places Portugal alongside Lithuania (147%) and just behind Hungary (237%) for the sharpest increases in the EU. In contrast, Italy and Finland saw slight price declines of 1% and 0.4%, respectively. The findings provide critical context for the current state of the Portuguese property market, which is explored further in our market intelligence and analysis section.
According to the report, the financial burden of housing has intensified for European households, which allocated 19.2% of their disposable income to housing costs in 2024. Nearly 10% of urban residents are now spending over 40% of their income on rent or mortgage payments. The situation has been exacerbated by rising interest rates, a structural lack of supply, and higher energy costs, resulting in one in ten families reporting arrears on these payments. Lisbon is specifically spotlighted as one of the most challenging cities for tenants, with the report estimating that renting a centrally located apartment could absorb up to 116% of the average salary in 2025. This extreme affordability pressure points to a market where demand far outstrips the available supply of rental properties.
The report also details a growing urban-rural divide. Projections indicate that 83% of Europeans will reside in urban areas by 2050, a demographic shift that has already seen cities gain ten million inhabitants while rural areas lost eight million since 2014. This trend intensifies pressure on urban housing markets. The EU currently faces an estimated deficit of four million affordable homes. Compounding the issue is the inefficiency of the existing housing stock; 33.1% of Europeans live in homes considered too large for their needs, and social housing accounts for only 8% of the total stock. The European Investment Bank (EIB) estimates that one million new housing units are needed annually to stabilize the market, yet construction investment fell by over 2% in 2024.
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Construction costs themselves have risen by 56% since 2010, with national peaks of 159% in Hungary and 136% in Bulgaria. Furthermore, the energy inefficiency of Europe's building stock is a major concern, as 85% of it was constructed before 2000, contributing to 40% of the EU's energy consumption. The influence of institutional investment is another key factor, with funds owning nearly half of new homes in Ireland and holding €40 billion in residential assets in Berlin. This, coupled with a booming short-term rental market expected to reach 152 million overnight stays in 2024, has significantly reduced the availability of long-term rental housing. For investors considering this market, understanding the investment risks is paramount.
The Council's document warns that the housing crisis is now impacting the EU's economic competitiveness, which represents 5.3% of its GDP, by hindering labor mobility and productivity. The social consequences include rising inequality and political polarization, as young and low-income individuals are priced out of the market. In response, Brussels has emphasized that a one-size-fits-all solution is not feasible. Instead, each Member State is encouraged to develop a balanced policy mix, potentially including subsidies, rent controls, and incentives for energy-efficient renovations, to address their specific challenges without creating market distortions. The report concludes by positioning housing as a critical factor for both social cohesion and economic competitiveness within the Union, setting the stage for the European Commission's forthcoming affordable housing plan. Stay informed on Lisbon property market developments at realestate-lisbon.com.