The Price of Paradise: Lisbon Tops Europe's List of Cities Where Homes Are Out of Reach

Lisbon has a problem. A 50-square-metre flat in the city centre costs around €338,000. The average net salary in the Portuguese capital is roughly €1,416 a month – about €17,000 a year. Doing the math: nearly 19 years of income, before taxes, before rent, before food, before anything else, just to buy a modest apartment.

Welcome to one of Europe's least affordable housing markets.

According to the latest figures from data platform Numbeo, a home in Lisbon now costs about 18.7 times a typical household's annual income. Among Europe's major cities, only the Croatian coastal city of Split matches that figure. The price-to-income ratio measures how many years of earnings are needed to purchase a property. As a rule of thumb, a ratio above 10 signals a problematic market. Lisbon and Split are at almost double that level.

The list of cities where housing has become increasingly out of reach is long. Prague, Milan, and Tirana all post ratios of 18.1. Vienna follows at 17.4, Belgrade at 17.2, Paris at 17.0, and London at 16.0. But Lisbon offers one of the clearest examples of how house prices can pull away from local purchasing power. Over the past decade, Portuguese house prices have risen by almost 240 percent, according to Global Property Guide data. Over the same stretch, the average Portuguese wage climbed from about €839 a month to €1,333 – a gain of roughly 59 percent. Prices rose four times faster than incomes.

The common explanation is simple: not enough homes. Portugal currently completes around 25,000 to 30,000 homes a year. Industry groups and public estimates suggest the country needs roughly 45,000 to 50,000 annually to meet demand. Portugal devotes only around 2 percent of its housing stock to social housing, among the lowest shares in Europe. But research suggests the story is more complicated. In its latest Housing Market Monitor, ABN AMRO indicated that income growth and lower mortgage rates have historically had a much greater influence on house price appreciation across Europe than population growth or construction shortages.

The housing crunch has fuelled Portugal's biggest wave of housing protests in decades. Since 2023, the Casa para Viver movement has brought tens of thousands onto the streets under the slogan "It's just not working anymore." Campaigners are calling for tighter rent controls, more affordable housing, and the use of vacant buildings. The crisis is perhaps most visible on Lisbon's outskirts, where families in informal settlements face eviction despite many working full-time and still being unable to afford market rents.

Despite mounting affordability pressures, few economists expect an imminent housing crash. BPI Research recently raised its forecast for Portuguese house-price growth in 2026 to 11.7 percent. Portugal still benefits from structural demand, relatively limited supply, and continued international interest. However, affordability metrics are flashing warning signals. A price-to-income ratio approaching 19, combined with house prices rising 240 percent while wages increased by only 59 percent, suggests valuations have become increasingly difficult to justify using domestic incomes alone. That does not guarantee prices will fall. But it does suggest Lisbon has become one of Europe's least affordable housing markets, with the gap between property prices and local incomes wider than at any point in recent decades.

Written by Andreas Hofer andreas.hofer@alpineweekly.com