Housing Costs Versus Income: An Analysis of Portugal's Economic Paradox
An opinion piece published by SAPO provides a detailed analysis of the economic contradictions in Portugal, focusing on the widening gap between housing costs, incomes, and national productivity. The author, Igor de Brito, CEO of UniPeople, notes that while Portugal is recognized for its high quality of life and safety, a structural economic problem persists: housing prices are reaching record levels while incomes remain largely stagnant. This has led to a situation where, for most Portuguese families, disposable income is insufficient to cover the cost of living, particularly in major urban centers.
The article presents data to illustrate this disparity. Citing figures from 2025, it states the average price per square meter is approximately €4,500 in Lisbon and exceeds €5,300 in Cascais. An estimate for the monthly cost of living for a couple with two children in Lisbon is put at €3,350, a figure that surpasses the combined net income of two average salaries, which totals around €2,600-€2,700. This data underscores the affordability challenges that are a primary focus of our market intelligence and analysis.
Despite these economic pressures, the article notes Portugal’s relatively high ranking in the World Happiness Report 2024, placing it 60th globally. The author suggests this is sustained by cultural factors like strong social ties and perceived safety, but warns this happiness is "fragile without a solid economic base." The core of the issue, according to the analysis, is a lack of productivity. "If housing prices rise 10% per year and salaries remain almost static, the only sustainable path is to generate more economic value," the author argues. This can only be achieved through enhanced productivity, innovation, and technology.
Need Expert Guidance?
Get personalized insights from verified real estate professionals, lawyers, architects, and more.
The analysis also points to the structure of the Portuguese economy, which is dominated by micro and small enterprises with limited capacity to scale and increase wages. The author proposes a region-specific fiscal policy, suggesting that IRS tax brackets could be adjusted based on the cost of living in different areas. For instance, a worker in Lisbon could have higher tax bracket thresholds to offset the more expensive environment. Such a policy would have significant implications, making consultation with expatriate tax service experts essential for foreign residents.
The article concludes by calling for a "productivity shock" and increased entrepreneurship to create sustainable growth. It frames the issue as a need to build a real economic base to support the country's desired quality of life, moving beyond temporary fixes. For investors, this analysis is a critical read on the underlying economic factors influencing the property market. For further reading, our guide on investment risks provides additional context.
Stay informed on Lisbon property market developments at realestate-lisbon.com.