Long-term rentals in Portugal: Lisbon is the 3rd most expensive European city

Property for rent in Portugal is getting more and more expensive. And it is precisely in the big urban centres, like Lisbon and Porto, where you can find the highest rent in the whole country. Comparing them with 24 European cities, Lisbon has been named the 3rd most expensive city to rent a house at the beginning of 2023, with average rent of a one bedroom flat in the city costing more than 2,000 euros. Only Amsterdam and Reykjavik came ahead of the Portuguese capital, according to the study.

The data are from the HousingAnywhere International Rent Index, which also reveals that in Amsterdam, renting a one bedroom flat cost 2,250 euros on average, the highest value of all 24 cities analysed. In second place is Reykjavik, the capital of Iceland, where renting a house cost 2,139 euros in the first quarter of 2023, reveals the study that analysed more than 52,000 properties placed on the rental market (focusing on one bedroom flats, studios and rooms).

Lisbon comes in third place in the ranking: here renting a one-bedroom flat cost, on average, 2,005 euros, a figure higher than that recorded in the previous quarter (1,910 euros). But the average value representing the cost of renting a home in the Portuguese capital was even higher between July and September 2022, with values reaching 2,200 euros, the document shows.

These were the only European cities - of the 24 analysed - that showed rental prices above 2,000 euros, as the fourth and fifth places occupied by Milan and Munich recorded average values of 1,800 euros.

This analysis also includes another Portuguese city: Porto, where average rent for flats reached 1,200 euros in the first quarter of 2023, having risen 200 euros from the 1,000 euros recorded in the previous quarter. Portugal's second largest city was thus the sixth city that presented the lowest rental prices in this analysis, standing alongside cities such as Vienna (1,190 euros), Brussels (1,150 euros), Valencia (1,100 euros), Budapest (990 euros) and Turin (879 euros).

Rental prices on the slowdown in Europe but Lisbon and Porto among highest risers

For the first time in six quarters, the HousingAnywhere International Rent Index has observed that the increase in house rents is "losing momentum". The average annual evolution of rents in these European cities was 11.9% between January and March 2023, a figure 2.4 percentage points lower than the 14.3% increase recorded in the previous quarter, reads the publication. Specifically, rent rose 7.9 per cent for flats, 10.9 per cent for rooms and 16.7 per cent for studios.

"The current slowdown in the increase of rental prices indicates only a return to the pre-pandemic state, marked by a significant imbalance between supply and demand. To tackle the European housing crisis, governments must act on the structural lack of housing supply with a balanced mix of incentives and restrictions," comments Djordy Seelmann, CEO of HousingAnywhere.

Still, this is not a homogeneous reality in all 24 European cities analysed by HousingAnywhere, which even highlights that Portuguese cities are among those that recorded the largest annual rent increases, as well as cities in the Netherlands and Germany:

• Rooms: renting a room in Portugal rose 22.5% in Porto in the first quarter of 2023 compared to the same period last year, settling at 435 euros on average. In Lisbon they rose 21.5% to 510 euros per month. Thus, the Portuguese cities were among the five that recorded the highest increases in prices of rooms for rent;
• Studios: renting a studio was 81.6% more expensive in Lisbon, the highest increase among the cities analysed, costing 1,212 euros per month. In Porto, the rent for studios rose 12.5% to 900 euros (on average);
• Flats: the rent for flats rose much less in the two Portuguese cities in year-on-year terms. In Porto, it increased 11.6% to 1,200 euros per month. And in Lisbon, renting a flat now costs 7.7% more, setting the median price at 2,005 euros per month.

The two largest Portuguese cities also stood out in the evolution of rental prices between the last quarter of 2022 and the first three months of 2023, the study points out. "In Portugal, both Porto and Lisbon recorded high quarterly increases in all property types," the document highlights. Specifically, renting a studio in Lisbon increased by 51.4% this quarter, a jump that made the Portuguese capital the city with the highest quarterly rise in studio prices in the Rent Index, followed by The Hague (31.6%) in the Netherlands. At the same time, Porto showed the biggest quarterly increase in prices for flats for rent with a 20% jump, followed by Helsinki (12.5%), the capital of Finland.

And there is no good news in the short term. "With the start of the high season in tourism, the supply of residential rental housing risks being further reduced in this period, as some landlords may switch their properties from medium/long term rentals to short term accommodation for tourism purposes," the publication further recalls. This is in spite of recent changes to holiday rental laws in Portugal. 

In addition, with a new academic year coming up in September, there will again be young students and professionals looking for homes, rooms or studios to rent, which again puts pressure on supply in this market and, consequently, gives gas to the rise in rent in the following months.

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