Lisbon in 2026: Reaching a Plateau or Entering a New Growth Phase?

Predictions of a stabilization in Lisbon's property market have been made repeatedly since 2018. Most of them have proven inaccurate. So how should investors interpret the current market trajectory?

The Numbers First

In 2025, property prices in Lisbon increased by 18.2%, following growth of just 5.5% in 2024.

This rebound surprised many market observers. For the first time, the average transaction price exceeded the symbolic threshold of €5,000/m², reaching €5,207/m² by year-end.

Meanwhile, areas on the South Bank experienced even stronger growth, with Barreiro recording an increase of 32.5% and Moita approaching 30%.

What Is Supporting Price Growth?

A Persistent Supply Shortage

The imbalance between supply and demand remains a key factor.

Although Portugal's residential pipeline expanded by 12% and Lisbon registered a 62% increase in new licensing applications, representing 4,250 housing units, this volume remains insufficient relative to demand.

Demand Is Expanding Geographically

Buyers are increasingly moving beyond central Lisbon and exploring surrounding areas.

This shift is driving price growth in locations that attracted far less attention just a few years ago.

The €5,000/m² Threshold Has Been Crossed

The crossing of this symbolic level establishes a new benchmark for property valuations and bank assessments.

As a result, downward price movements may become more difficult.

What Could Slow the Market?

Certain factors could weigh on future growth.

A significant rise in interest rates or a contraction in mortgage lending could affect demand. Rental yields are also becoming more compressed, standing at 4.6% in Lisbon compared to 5.4% in Porto.

In addition, regulations affecting short-term rentals remain a source of uncertainty for some investors.

Our Perspective

The central scenario remains one of continued appreciation, supported by limited supply and sustained international demand.

For buyers with a five- to seven-year investment horizon, Lisbon continues to present attractive long-term prospects.