Rental Market in Portugal 2025: Record Supply Growth and Stable Yields

Portugal’s residential rental market is undergoing significant transformation in 2025. According to a report by Idealista, housing supply increased by 49% in Q1 2025 compared to the same period in 2024. This surge is visible not only in Lisbon and Porto but also across multiple regions—reflecting a structural shift in how the market operates.

Key Trends

The growth in supply is driven by a combination of falling mortgage rates, tax incentives for young buyers, and persistent high rental prices, encouraging more homeowners to lease their properties. However, finding tenants has become increasingly difficult in several areas despite favorable conditions.

Top increases in listings: Viseu (+116%), Viana do Castelo (+92%), Porto (+71%), and Lisbon (+54%)

Moderate increases (20–60%) in Braga, Coimbra, Aveiro, and Beja

Declines observed in Portalegre (-50%), Vila Real (-24%), Funchal (-5%), and Ponta Delgada (-2%)

Over the past five years (2020–2025), available rental units jumped by 72% while demand rose by 81%. This imbalance explains the 43% rent increase during this period, reaching an average of €16.6/m².

Price Dynamics

Lisbon remains Portugal’s most expensive rental market at €22/m².

Followed by Porto (€17.5), Funchal (€15.9), and Faro (€14.2).

Bragança saw a 22% drop in rental prices, now averaging €6/m².

Rental Yields

Despite the supply growth, gross rental yields remained solid at 7.2% in Q1 2025, just slightly down from 7.3% a year prior and one of the best figures in recent years (second only to 2019).

Highest yields: Castelo Branco (8.6%), Santarém (7.5%)

Lisbon yields are modest at 4.7%, but offer greater liquidity and lower vacancy risk

Outlook

While increased supply has relieved pressure on tenants in some cities, high demand persists in key migrant-attractive regions, suggesting a localized—not national—trend. For investors, this underscores the importance of analyzing local sub-markets, as higher yields may come with greater risks like vacancy or price stagnation.