Housing costs in the Algarve now absorb more than half of household income, as rising prices and rents push families away from first-time home ownership, a study has found.
All cities in the Lisbon and Porto metropolitan areas, as well as across the Algarve region, have become “unaffordable” for a middle-income family seeking to rent a home for the first time, according to the report by real estate agency Century 21 released today.
The three regional capitals under review, Lisbon, Porto and Faro, are also deemed “completely unaffordable” in terms of house purchase prices, as they require ‘effort rates’ exceeding 50% of average household income.
In the Algarve, home ownership is likewise considered “unaffordable” by the report, while in the Lisbon Metropolitan Area (AML) there are nine municipalities where buying a home entails an effort rate above the 50% threshold. The cost of buying an Algarve home has risen by between €65,000 and €106,000 since 2022, while rents have increased by between €300 and €570 per month over the same period.
By contrast, residents’ incomes in the region have risen by just €170 to €240.
The study, entitled ‘Housing Affordability’ and published by Century 21 Portugal, indicates that sale prices and rents have risen by “40% or more in the majority of municipalities” in the Lisbon Metropolitan Area since 2022, while residents’ incomes have “grown by around 15%”, at a pace three times slower.
“Buying a 90-square-metre home now costs between €68,000 and €114,000 more than three years ago, translating into monthly mortgage payments around €300 higher than those recorded in 2022,” the report states.
In the rental market, monthly increases over the past three years have averaged around €400, compared with wage rises estimated at roughly €200.
In the Porto Metropolitan Area (AMP), both prices and rents rose by more than 50% in most municipalities over the same period, while household incomes “grew by just 18%”, according to the analysis. The increase in purchase prices in the AMP ranges between €66,000 and €102,000, resulting in additional monthly repayments of between €230 and €400.
Rental costs in the region have risen by between €280 and €500 per month.
The study concludes that house prices in Portugal have almost doubled over the past five years, registering a further acceleration of 23.4% in 2025.
It also estimates that “access to home ownership has become impossible in coastal capitals for an average family, while remaining viable in most inland cities”.
In inland Portugal, prices in 15 district capitals corresponded to effort rates below 50% of income, but only seven were considered “affordable”, requiring effort rates below 33%.
As for renting, only two inland cities offered prices that did not demand a high effort rate, defined as below 33% of income.
The report further finds that only 48% of homes on the market are “within reach of 77% of families (up to €330,000), pointing to a clear structural imbalance”.
“The problem is not abstract, it’s measurable. Supply is not aligned with the economic reality of families, pushing many households into effort rates that are incompatible with a stable life,” revealed Ricardo Sousa, chief executive of Century 21 Portugal, in a statement.
The Century 21 Portugal study focused on access to housing for first-time buyers in their own cities, particularly families and young people. It was based on sale prices and rents provided by Confidencial Imobiliário (SIR), considering 90-square-metre properties and 2025 market values across mainland Portugal.
The average income used corresponds to declared gross household income after personal income tax (IRS) in 2023, with projections for 2024 based on the annual growth in private consumption estimated by the National Statistics Institute (INE).
