Coastal Rents in Portugal Surpass Porto Prices

Analyze the rising rental values in Madeira, Setúbal, and the Algarve, as they outpace Porto, highlighting a trend towards coastal living in Portugal.

Rental values in Portugal are experiencing a notable ascent, revealing a distinct trend of the nation gravitating towards its picturesque coastlines. Greater Lisbon and the southern regions of the country are leading the charge with the highest rental prices, closely followed by the enchanting Funchal, the capital of the Autonomous Region of Madeira.

In a striking display of market dynamics, Funchal has recorded a staggering year-on-year increase of 37.5% in median rents during the second quarter. This surge can be partially attributed to the burgeoning demand for housing, evidenced by a remarkable 40% uptick in new rental contracts. Meanwhile, the Porto Metropolitan Area boasts a median rental value of 8.89 euros per square meter, positioning it fifth in the national hierarchy of rental prices.

The Algarve emerges as the most expensive region, with a median rent of 9.52 euros per square meter, followed closely by the Setúbal Peninsula at 10.07 euros/m² and Madeira at 10.26 euros/m²—making it the second most costly locale in the country. Topping the list, however, is Greater Lisbon, where the median rent reaches an eye-watering 12.99 euros per square meter. The Alentejo coast, with a rental value of 8.52 euros/m², closely mirrors the Porto Metropolitan Area, while these six regions surpass the national average of 8.08 euros/m².

Conversely, the regions of Tâmega e Sousa, Alto Alentejo, and Trás-os-Montes languish at the bottom of the rental spectrum, where one can secure a home for less than 4 euros per square meter—a veritable bargain in today’s market.

Delving into the NUTS III sub-regions and municipalities with populations exceeding 100,000, only the Azores (-2.8%) and Alto Alentejo (-0.3%) have recorded a decline in average rental values when juxtaposed with the second quarter of 2024 against the same timeframe last year.

As anticipated, Lisbon retains its title as the most expensive municipality for renting, with a median rent of 1,600 euros for a 100 square meter dwelling. However, it appears that Lisbon is not quite keeping pace with the frenetic acceleration observed in other municipalities, where the rental market has become increasingly burdensome for prospective tenants.

In Lisbon, the year-on-year change in median rents for the second quarter stands at 5.1%, a figure that is less than half of the national average of 11.1% across the 22,181 housing contracts signed—an increase of 6.9% compared to the preceding quarter from January to March. The rental landscape in Portugal is thus a complex tapestry, woven with threads of demand, regional disparities, and economic pressures, leaving many to ponder the sustainability of such rapid growth in the Portugal real estate market.