Portugal's Housing Crunch Deepens: What It Means for Foreign Residents

A wave of new building promises, fresh tax carrots for landlords and a flurry of court-ordered pauses to demolitions have filled Portuguese headlines for months. Yet academics, veteran municipal officers and resident groups insist that housing remains the country’s most pressing unresolved question—one that is already reshaping where foreigners can afford to live, how long they can stay and what kind of contracts they are offered.

Why expats are feeling the squeeze first

Lisbon rents climbed more than 35 % between early 2023 and mid-2025, according to Idealista, while short-supply suburbs such as Oeiras and Almada posted similar hikes. For newcomers paid in foreign currency that may still look cheap, but local incomes have risen far slower, and the mismatch is fuelling an increasingly hostile mood. Real-estate agents confirm that landlords now routinely demand one-year-up-front payments or guarantors, practices that remain legal but were rare a decade ago. Long-term visa applicants are discovering that the immigration service, AIMA, verifies lease authenticity and habitability; overcrowded flats split into “bed-rental” schemes are being rejected, leaving candidates scrambling for last-minute alternatives.

From slogans to the fine print of “Construir Portugal”

The centre-right government’s flagship plan, unveiled in April 2024 and expanded this June, pledged 59 000 additional dwellings—public, private and cooperative—over the next four years, with 8 000 of those to be delivered by December 2025 under the EU-funded PRR. Measures range from 100 % mortgage guarantees for buyers under 35 to an IMT waiver on first homes below €316 000. Simplified licensing rules, rebranded Simplex Urbanístico, aim to cut approval times in half.

Policy analysts, however, warn that none of this constitutes the rapid-reaction tool they deem essential. “The housing dossier was folded into the Infrastructure Ministry and lost both visibility and budget heft,” notes sociologist Sandra Marques Pereira, arguing that an autonomous ministry is the minimum signal of political will. Isabel Santana, who spent two decades running Lisbon’s municipal housing division, goes further: “Without an emergency programme, we are on track to recreate the informal settlements of the 1980s.”

Demolitions, injunctions and the return of the barraca

Evidence of that slide is visible on the capital’s northern rim. In Loures’ Talude Militar, municipal crews tore down 55 self-built shacks in July, leaving 161 residents camped next to the rubble until a judge halted the operation. A similar scene played out the same week in Amadora, where eight homes vanished before a court order froze the excavators. The activist network Movimento Vida Justa says more than 90 families, including 60 children, are sleeping outdoors after losing informal dwellings since last summer.

The national statistics office does not publish a consolidated eviction tally, but its 2024 housing census identified 133 559 households living in “indignity”—everything from tin-roofed huts to fire-risk overcrowding. Severe housing deprivation rose from 4.7 % in 2015 to 6.0 % in 2023, reversing a decade of progress.

Lessons officials claim they will not repeat

Portugal’s last major intervention, the Special Rehousing Programme (PER) launched in 1993, rehoused tens of thousands of slum residents around Lisbon and Porto. It also produced cookie-cutter estates on the urban fringe, criticised for shoddy build quality and social isolation. Santana, who helped draft PER protocols, fears déjà-vu: “Fast numbers cannot eclipse community design, or we will pay twice—once to build, then again to fix the fallout.”

The tightrope for municipalities

Under law, city halls draft Local Housing Strategies and secure EU recovery funds, but land prices, contractor shortages and fluctuating governments slow delivery. Sintra’s mayor Basílio Horta complains that PRR deadlines often clash with zoning appeals and archaeological surveys: “We risk forfeiting money because the calendar is political, not technical.” Cash-strapped councils also balk at buying existing flats, a route experts say would place units on the market years faster than new builds.

What 2026 may hold and how foreigners can navigate it

Most economists see price stabilisation rather than a dramatic drop next year; the supply pipeline is real but will enter the market gradually. Prospective residents should therefore secure leases of at least 12 months, register them on the Portal das Finanças—a legal obligation that protects both parties—and verify that the landlord has an energy certificate, often a red flag for informal conversions. Tenants facing sudden eviction have 30 days to contest under the 2024 amendments to the Lei do Arrendamento Urbano.

Meanwhile, parliamentary campaigns are turning the crisis into electoral fodder. Proposals range from rent caps tied to salary indexes (Left Bloc) to an IMI holiday for primary residences (Chega) and the scrapping of transfer tax for under-35s (Iniciativa Liberal). None yet match the scale of an emergency plan, but pressure is mounting. For expatriates eyeing Portugal’s sunshine and digital-nomad visas, the message is clear: keep an eye on Parliament, not just the property portals.