Rental Housing in Portugal: Declining Demand and the Most Affordable Cities

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In the second quarter of 2025, demand for rental housing in Portugal fell by 45% compared to the same period in 2024 — from 32 to 17 requests per listing. The most sought-after city was Portalegre, while the least popular were Porto and Coimbra, reports Euronews, citing Idealista data.

The rental market has become less competitive: the number of inquiries declined across the country, but the distribution of interest was uneven. Portalegre topped the list with 53 inquiries per listing. It was followed by Faro (33), Évora (32), and Ponta Delgada (30). In Santarém, Leiria, and Setúbal, each listing averaged 27 inquiries, in Funchal and Guarda 25, in Castelo Branco 24, in Vila Real 21, and in Beja and Bragança 20.

The lowest results were recorded in Viseu (18), Aveiro (15), Braga (14), Lisbon (14), and Viana do Castelo (13). Porto and Coimbra stood out with only eight and seven inquiries per listing, respectively. Analysts link this decline to greater supply on these markets. Compared to the same period last year, the steepest drops were seen in Coimbra (–73%), Porto (–62%), Viseu (–56%), Bragança (–51%), and Lisbon (–49%). The exceptions were Guarda (+40%) and Funchal (+7%).

Rental Prices: Still Rising, But More Slowly

Rental rates continue to grow, though at a slower pace. The median price rose by 3.5% in Q2 2025. The price gap between the most expensive and the most affordable municipalities exceeded €1,000.

The most expensive segment remains the coastal and tourist areas, along with suburbs of Lisbon. In Palmela (Setúbal district), the average rent reached €1,778 per month, and in Lisbon €1,751. Eight municipalities have rent levels above €1,500: Palmela, Albufeira, Lagos, Sintra, Oeiras, Funchal, Faro, and Olhão.

In Porto, rents are slightly above €1,200. Suburban Lisbon municipalities such as Barreiro, Vila Franca de Xira, and Amadora also approach this level. Affordable housing below €750 can be found in Covilhã, Bragança, Chaves, Castelo Branco, and Figueira da Foz. In Covilhã, the average rent is just €582.

Housing Market Pressures

The purchase market reflects similar dynamics. In Lisbon, the average home price in May 2025 reached €650,000 (+33% YoY), while incomes grew by only 4%. In Porto, the figure was €395,000 (+14%), in Braga and Aveiro €340,000 (+15%), and in Viana do Castelo €287,000 (+13%). This growing gap between prices and incomes restricts affordability for households.

Demand for room rentals remains high, especially among students. The average room rent is €415 per month. In Lisbon, rooms cost about €500, with some areas exceeding €700. In Porto, students pay around €400, in Braga €323, and in Coimbra €280.

According to Idealista representative Rúben Marques, the drop in inquiries is due not to a fall in interest but to increased supply. At the same time, prices remain very high and “beyond the reach of much of the population.” While competition weakens, the affordability problem remains unresolved, and renters’ choices are increasingly determined by price.