More housing supply is urgently needed to ease the housing crisis in Portugal. In the short term, one of the government’s proposed solutions is to stimulate the rental market. Among the measures under discussion is a reduction in income tax to 10% on contracts with moderate rents.
Increasing the number of homes available to rent is key, and one way to do that is by buying property to let. At the beginning of 2026, this type of investment delivered a gross yield of 6.3%, according to idealista. While returns have fallen, this segment of the market is now considered less risky.
In the first quarter of 2026, purchasing a home in Portugal to place on the rental market generated a gross return of 6.3%. That is 0.9 percentage points lower than in the same period of 2025 (7.2%) and 1 percentage point below the first quarter of 2024 (7.3%). Compared with the same period in 2019, when housing profitability stood at 7.5%, returns have declined by 1.2 percentage points.
However, a fall in profitability during a housing market adjustment is not necessarily negative. Lower yields generally indicate lower risk. For property investors and cash-rich households, this can mean a greater likelihood of securing tenants and benefiting from potential capital appreciation over time.
It is worth noting that gross profitability reflects the return on housing investment before taxes, charges, and other costs. The latest figures are based on purchase and rental prices in the first quarter of 2026, a period marked by high property values. Sale prices rose by 12% in the year to March, while rents fell by 1.2% over the same period, according to the idealista price index.
The cities where it is most and least profitable to invest in housing
Looking at district capitals and the autonomous regions, Bragança currently delivers the highest return for buying a house as an investment, with a gross yield of 8%. It is followed by Castelo Branco (7.9%), Coimbra (6.5%), Santarém (6.5%) and Leiria (6.1%).
These higher returns tend to be linked to greater investment risk. In practical terms, this can mean it may take longer to find tenants, and there is less certainty that the property will increase in value over time.
According to idealista, mid-range profitability for buying a house to rent can be found in cities such as Évora (5.8%), Braga (5.6%), Ponta Delgada (5.6%), Setúbal (5.4%), and Viana do Castelo (5.2%). Aveiro, Faro and Funchal each show returns of around 5%, while Porto stands at 4.9% and Viseu at 4.7%.
The lowest level of housing profitability is recorded in Lisbon, at 4.3%. Although the capital has the highest rental prices in the country, it also has some of the most expensive property prices. Lower yields in this case reflect lower investment risk, with a stronger likelihood of securing tenants and benefiting from potential capital appreciation.
The same analysis also looked at other types of property across the country. Offices currently deliver a return of 8.2%, retail units (shops) 8.1%, and garages 5.5%.
Methodology
For this analysis, Idealista calculated gross rental yields by dividing the asking sale price of properties by the rental values requested by owners across different markets in the first quarter of 2026. The figure obtained represents the gross return a property can generate for its owner through renting.
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