Impact of Migration on Housing Prices in Portugal (2010–2025)

One of the most significant factors is Portugal’s rapid population growth from immigration.

Housing costs in Portugal have skyrocketed in recent years, creating a crisis that for the first time is hitting even the middle class essential-business.pt. Multiple factors – on both the demand and supply sides – have fueled this surge. Below we break down the key contributors:

Surging Population Due to Immigration

One of the most significant factors is Portugal’s rapid population growth from immigration. Portugal’s foreign resident population quadrupled from about 420,000 in 2017 to over 1.5 million by 2024, now roughly 15% of the total population martinscastro.pt. This means around 1.1–1.2 million new residents (mostly arriving since 2017) are now seeking housing, putting enormous pressure on the market. Many of these newcomers are low-income migrants coming for work – for example, large numbers from Brazil (the biggest migrant community) and from South Asia (Nepal, Bangladesh, India, etc.) for jobs in agriculture, construction, and services reuters.com.

Such a sudden influx greatly increased demand, especially for affordable rentals. Areas that traditionally housed working-class Portuguese – the suburbs around Lisbon (like Amadora, Sintra, etc.) – have seen an explosion in demand. Historically, many middle-class locals lived in these suburbs (not the pricey city center). Now those same areas are crowded and expensive, pricing out locals. In fact, home values in some Lisbon suburbs more than doubled in just a few years (e.g. Amadora’s prices jumped 107% in five years ahouseinlisbon.com). Several outlying municipalities (Almada, Sintra, Setúbal, etc.) saw price increases over 50–60% since 2018 ahouseinlisbon.com, as buyers and renters who can’t afford Lisbon proper compete for housing in the periphery.

Overcrowding and Rental Pressures

With too many people chasing too few homes, overcrowding has become common – and this itself feeds into rising prices in the lower-cost segment. Nearly 19% of non-EU immigrants in Portugal live in overcrowded accommodations, compared to only about 8% of native Portuguese reuters.com. It’s not unusual for multiple migrant workers or families to share one apartment. This crowding is often a survival strategy due to high rents, but it can also push rents even higher for cheap units: landlords can charge by the room or per person, knowing a group will pool resources to pay more than a single family could. The Migration Observatory notes many foreigners “have to live in overcrowded conditions to have a roof over their heads,” with some even renting beds in shifts (paying to use a bed for a few hours) reuters.com. In essence, high demand at the low end lets landlords raise prices, since tenants are desperate enough to cram together and still meet the rent. This dynamic has made formerly inexpensive suburbs much less affordable for the local middle class (who typically can’t or won’t crowd multiple families into one flat).

Chronic Housing Supply Shortage

On the supply side, Portugal has not built enough housing to keep up with demand. There’s a “chronic housing shortage for the middle classes” that has persisted for a decade essential-business.pt. Key issues include:

• Low Construction of Affordable Homes: Private developers focus on high-end projects, because building costs have surged (materials up ~80% in 3 years) and moderate-income buyers can’t cover the cost of new construction essential-business.pt essential-business.pt. It’s difficult to profit from building entry-level housing, so developers avoid it essential-business.pt. This means new supply in affordable segments lags far behind demand.

• Scarce Public Housing: Only about 2% of Portuguese households are in public (social) housing, one of the lowest rates in Europe jordantimes.com. (By contrast, in many other European countries 20–30% live in social housing.) Decades of low public investment leave lower-income and middle-income families with little safety net in housing.

• Land and Zoning Constraints: In hot markets like Lisbon, Porto, or the Algarve, buildable land is limited and expensive essential-business.pt essential-business.pt. This drives up land prices and pushes developers toward luxury projects to recoup costs essential-business.pt. The result is plenty of new upscale condos, but not enough reasonably priced homes.

• Bureaucracy and Slow Processes: Although not cited in the sources above, it’s widely noted that lengthy permitting and regulatory hurdles in Portugal slow down new housing development, further constraining supply.

With construction so constrained, the massive spike in demand (from migration and other factors) inevitably leads to price hikes – there simply weren’t enough homes to accommodate the growth. As one housing researcher put it, “there isn’t enough housing for everyone… and not enough housing that young people can afford on their salaries. It’s impossible.” theguardian.com.

Foreign Investors and “Golden Visa” Buyers – A Smaller Niche Factor

The chart makes it very clear: by 2024, over a million new foreign residents had settled in Portugal, while Golden Visas remained only in the tens of thousands total. This highlights how regular migration has been the overwhelming driver of housing demand, whereas Golden Visas played a limited, niche role mostly in the luxury market.

Foreign investment in property has contributed to price growth, but mainly in specific segments (high-end urban and resort markets) and to a lesser extent than often assumed. Starting in 2012, Portugal’s government actively courted wealthy investors through programs like the Golden Visa (which grants residency to those who buy expensive real estate) and tax breaks for foreign pensioners or remote workers. This did inject money and drive some development:

• The Golden Visa program alone brought in around €3.5 billion investment from 2012–2018, and foreign buyers’ share of property transactions surged during that period fenix.tecnico.ulisboa.pt. This led to noticeable price increases in prime locations, as acknowledged by studies fenix.tecnico.ulisboa.pt.

• However, the scale of Golden Visa buyers is very limited relative to Portugal’s housing market. In total only about 12–13,000 investor visas were issued since 2012 (plus ~20,000 family members) getgoldenvisa.com – a drop in the bucket compared to 1.5 million total immigrants. These investors tend to buy luxury villas, upscale city-center apartments, or resort properties that are “beyond the reach of the lower middle classes anyway,” as one Portuguese mayor noted essential-business.pt. In other words, wealthy Americans, Chinese, French, etc., weren’t competing for the same homes as a local family in Amadora. Researchers also found that while Golden Visas initially coincided with price jumps, the overall impact on broad housing prices was likely minimal fenix.tecnico.ulisboa.pt (it was one factor among many, and mostly in the high-end market). The government even decided in 2023 to end new Golden Visas as part of housing reforms, acknowledging it wasn’t worth the perceived damage to affordability.

• Digital Nomads and Expat Remote Workers: In recent years Portugal became a hotspot for remote-working professionals (e.g. Americans drawn by the climate and a special 10-year tax break on foreign income). These expats often have higher budgets and seek apartments in Lisbon, Porto, or coastal towns. Their presence can drive up rents in trendy neighborhoods. However, the numbers are relatively small – for example, only about 10–15,000 U.S. citizens reside in Portugal (Americans made up a big wave but are still under 1% of total foreign residents) remotelifept.com. Similar communities of Germans, French, Brits, etc. exist, but collectively “wealthy expats” are a minority of buyers/renters. They do impact certain locales (e.g. Americans were among the top foreign buyers in Lisbon’s historic center reuters.com), yet this is not the primary nationwide driver. The average home price is being pushed more by broad-based demand (from 1+ million new residents and rising domestic household formation) than by a few thousand digital nomads.

In summary, foreign elite buyers are a factor – but a far smaller one than the surge of regular immigrants. Even officials who debunk scapegoating of “rich foreigners” admit the housing crisis is much more about structural issues and mass demand, not just a few investors essential-business.pt.

Tourism Boom and Short-Term Rentals

Another demand-side pressure has been record tourism and the rise of Airbnb-style rentals. Portugal’s popularity as a travel destination led many property owners to convert homes into lucrative holiday rentals for tourists, especially in Lisbon, Porto, and the Algarve. This shrank the long-term rental supply for locals. As one report noted, “a tourism boom has seen a surge in short-term holiday lets, further squeezing the housing market.” reuters.com Every apartment turned into an Airbnb is one less available for residents, which drives up rent for the remaining homes. This phenomenon heavily impacted historic city centers – places where locals have now largely been priced out. (It’s worth noting, however, that middle-class Portuguese had already largely moved out of Lisbon’s city center decades ago. The recent tourism wave accelerated gentrification in the center, but the middle class was living in the suburbs, which are now also under pressure as discussed.) The government’s 2023 “Mais Habitação” housing package included measures to restrict new short-term rental licenses, recognizing that unchecked tourist rentals worsened the housing squeeze.

Economic Factors: Low Wages, Rising Interest Rates, and Credit

Here’s the chart showing how housing affordability has evolved in Portugal (2010–2024), measured by how many square meters an average monthly salary can buy.

• In 2010, a salary could buy close to 1 m² of housing.

• By 2024, that had dropped to around 0.5 m² – meaning affordability has effectively halved in just over a decade.

This illustrates how house prices have far outpaced wage growth, making it increasingly difficult for the middle class to access housing.

Portugal’s economic context also plays a role:

• Wages vs. Housing Costs: Portuguese salaries are among the lowest in Western Europe, and have not kept up with housing inflation essential-business.pt. This means a given increase in house prices hits affordability much harder. Even moderate price rises can price out locals, and the actual rise has been extreme – nationwide housing prices jumped ~124% since 2015 (versus ~53% EU average)jordantimes.com. In Lisbon, prices soared even more – 186% increase in home prices since 2015, and 94% rise in rents reuters.com – while incomes grew only marginally. The middle class simply cannot afford today what they could 5–10 years ago, creating a crisis of affordability.

• Cheap Credit (until recently): For much of the past decade, interest rates were at historic lows. This made mortgages cheap and encouraged people (and investors) to buy property, further boosting demand. Housing became a preferred investment (better returns than bank deposits), attracting domestic and foreign buyers alike. Recently interest rates have begun climbing, which is starting to cool demand – but there was a late-2021/2022 rush of buyers locking in low rates, which contributed to a final burst of price growth. Even in early 2025, a dip in interest rates and a new public mortgage guarantee for young buyers led to another 16% quarterly price spike jordantimes.com. Easy credit has thus been a double-edged sword: it allowed more people to buy, but collectively that pushed prices higher.

• Investor Speculation: Beyond official “Golden Visas,” plenty of other foreign and domestic investors saw Portuguese real estate as an opportunity – especially after 2015 when the market was recovering from a slump. Investors bought up properties to flip or rent out, contributing to price escalation. Some bought entire blocks to turn into tourist apartments essential-business.pt. This speculative demand layered on top of genuine end-user demand from population growth.

Conclusion: A Perfect Storm of Demand Outstripping Supply

In conclusion, Portugal’s housing price boom is the result of multiple converging factors – but the main driver is the imbalance between surging demand and a stagnant housing supply. On the demand side, an unprecedented influx of residents (adding ~15% to the population in a few years) combined with tourism and some investor interest has created intense competition for homes. On the supply side, construction of affordable housing has lagged far behind needs, exacerbated by policy shortcomings and economic constraints.

While high-profile causes like Golden Visas or digital nomads grab headlines, their overall impact is relatively small. The bulk of demand pressure comes from the hundreds of thousands of regular workers and families who have moved to Portugal, plus local younger generations trying to form households. As housing researcher Simone Tulumello explains, Portugal followed a development model “heavily focused on real estate and tourism,” and now that model’s success has backfired into an explosion in housing prices impacting everyone reuters.com.

Being truthful about the numbers is important: for example, only ~13,000 Golden Visas were issued over a decade getgoldenvisa.com – a drop in the ocean – whereas over a million other immigrants arrived in just the last 6–7 years. Thus, policy solutions need to address the broader issues: boosting housing supply (especially affordable units), curbing speculative pressures (e.g. regulating short-term rentals and limiting exploitative rent practices), and managing the pace of immigration in balance with housing infrastructure. Without tackling those core issues, the middle class and low-income residents will continue struggling in what has become a “suffocating” housing crisis reuters.com. reuters.com martinscastro.pt

Sources: Confidencial Imobiliário via Reuters; Agency for Integration, Migration and Asylum (AIMA) via Martins Castro Consulting; Reuters; AFP/Eurostat; Essential Business (Christopher Graeme); Statistics Portugal (INE). (Citations above provide specific supporting data.)