Portugal and Spain struggle as EU housing black spots
Iberian neighbours afflicted by vast property shortages due to immigration, bureaucracy and high construction costs
Portugal and Spain are struggling with some of the EU’s worst housing crises, as immigration-driven population growth, bureaucracy and high construction costs combine to create severe property shortages.
Such shortfalls are stoking public discontent and political tensions across Europe, driving up prices and rents, forcing people out of their neighbourhoods and leaving many unable to afford even a modest home.
But the strain is particularly acute in the Iberian peninsula’s biggest cities.
Portugal built 300,000 fewer properties than its population needed between 2021 and 2025, equivalent to 6.6 per cent of all the country’s households last year, according to a Bank of Spain study. Spain’s shortfall in the same period was 750,000 units — 3.7 per cent of all households.
By contrast, the Eurozone average shortfall equalled 0.5 per cent of all units, the study found. And the two Iberian countries also have some of the lowest stocks of public housing in the EU.
Bank of Portugal governor Álvaro Santos Pereira said in written answers to FT questions: “The housing affordability problem in Portugal is an ongoing concern, which is felt in several regions of the country, including in Lisbon and Porto, where affordability issues are more pronounced.”
He noted that “high migration inflows have resulted in an increase in the number of resident households” but argued that the solution lay in boosting the supply of new homes.
A surge in immigration to Portugal in recent years has included both low-income arrivals from south Asia and well-off recipients of “golden visas”, which could be obtained by buying property until the rules were tightened in 2023.
But Santos Pereira said the housing situation was improving. The Bank of Portugal said housing construction broadly kept up with the rate that new households were formed in 2025, in part due to reduced immigration. However, the cumulative housing deficit from previous years remains.
Centre-right Prime Minister Luís Montenegro, in power since 2024, has eschewed the anti-immigrant rhetoric of rightwing populists but deterred new arrivals by tightening entry rules and temporary residency requirements.
Santos Pereira, who was appointed as central bank governor last year, has sought to shift the focus away from demand. “The emphasis should be put on supply-side measures, given that the lack of supply is at the root of the accumulated shortfall,” he told the FT.
The construction sector, however, has still not recovered from the devastating consequences of the Eurozone crisis, said Manuel Maria Gonçalves, chief executive of the Portuguese Association of Property Developers and Investors. “We lost companies, we lost workers and we lost productive capacity,” he said.
Developers were ready to build today, he added, but rising construction costs and excessive bureaucracy meant it was difficult to make a profit from constructing “middle-class” homes. As a result, they were pushed “towards higher-end segments where those costs can still be absorbed”.
Still, Gonçalves applauded measures approved by the Portuguese parliament this year — including lower VAT on construction work and simpler licensing procedures — saying that they “should improve the economics of housing projects”.
The Bank of Spain measured deficits by calculating the difference between the net number of new households formed every year and the number of residential units approved for construction two years earlier, including the time lag to account for building periods.
It found Germany was the big EU economy with the strongest housing supply, with a surplus equivalent to 0.5 per cent of all households from 2021-25, counting the number of building permits approved. But it acknowledged that if the calculations used the number of new homes completed, the country had a small deficit of 0.1 per cent.
In both Spain and Portugal, the use of apartments for tourist rentals is reducing the stock of housing available for residents. Property developers and civil society groups say shortages are forcing people to sleep on friends’ sofas, rent individual rooms in units occupied by multiple families, and endure ever-longer commutes.
Lisbon residents earning the average wage would have to pay more than 110 per cent of their income to rent a typical one-bedroom apartment in the city centre — the highest level in Europe, according to Numbeo, a data provider, as well as Deutsche Bank and FT calculations.
In Madrid and Barcelona, the figure is 75 per cent. In Spain, housing is voters’ top concern, according to public pollster CIS. Prime Minister Pedro Sánchez, who leads a leftwing minority government, maintains an open-door immigration policy that has driven up demand for property, with the country’s foreign-born population surging by an annual average of 665,000 since 2022.
But Sánchez has been largely stymied on housing policy since his re-election in 2023 because he cannot get major legislation through parliament and because regional governments have more powers in the area.
In April, his government approved a €7bn housing plan for 2026-30 that includes financing for more public housing and the rehabilitation of empty buildings. But private developers say the root causes of shortages lie elsewhere.
Juan José Perucho, managing director of large Spanish developer Ibosa, said significant obstacles included bureaucracy and legal challenges that mean it takes years to obtain permission to develop on new plots.
But a bigger factor, he said, was the rapid growth in the number of working immigrants who are seeking affordable housing in the same segment of the market. “For both sales and rentals, we’re reaching a point where prices have hit levels that are no longer compatible with people’s wages,” he said.
Additional reporting by Carmen Muela in Madrid
Photo: Demonstrators in Porto protest against the housing crisis. Source: David Oliveira/Reuters Connect.
Portugal`s Housing Crisis Turns Into Open Street Battle Over Rights and Markets
Tomás Ferreira, The Portugal Post
2 March 2026
Portugal`s Housing Affordability Crisis: 16 Cities March as Rent Consumes Half of Salaries
90 groups protest housing crisis across 16 Portuguese cities as government removes rent caps and speeds up evictions. What this means for your rent.
The Portugal Housing Coalition is mobilizing across 16 cities this weekend, signaling that tensions between residents and policymakers have reached a breaking point. For nearly three years, the Casa para Viver platform—a sprawling network of tenant unions, municipal groups, and labor federations—has pushed back against skyrocketing rents and displacement. Now, with nearly 90 organizations preparing coordinated demonstrations, the movement demands not incremental relief but a fundamental reorientation of how Portugal treats shelter: as a constitutional right rather than a commodity for financial speculation.
Why This Matters
• Rent barriers have shattered affordability norms: Monthly housing payments now consume 35-50% of median household income in major cities, compared to the European benchmark of 25-30%.
• Government policy swung opposite in March 2026: Rather than expand affordable housing, Prime Minister Luís Montenegro`s Cabinet eliminated rent caps and streamlined eviction procedures—decisions the coalition calls deliberately hostile to working families.
• Empty homes dwarf actual occupancy crisis: 723,000 vacant properties sit idle while only 26,000 new units are built yearly—less than 60% of what demographers calculate is needed to accommodate growing households and immigration.
The Real Friction for Residents Right Now
Renters should anticipate continued upward pressure on monthly costs. The government removed rent caps on new contracts, meaning landlords now have full pricing freedom. While incentives theoretically encourage listing vacant units, any savings from increased supply could evaporate if asking prices rise in tandem. The coalition`s demand for 10-year minimum lease terms remains aspirational without parliamentary backing.
Variable-rate mortgage holders face exposure to interest rate volatility. The European Central Bank trajectory depends heavily on energy markets—fragile amid Middle Eastern tensions. A payment freeze at February 2026 levels would provide immediate relief but requires presidential or parliamentary action neither seems forthcoming. Budget defensively for potential interest rate increases.
First-time buyers confront a structural mismatch. Annual price growth forecasts of 7% continue outpacing wage increases. Purchasers compete against institutional investors and affluent foreign buyers for properties that become progressively more unaffordable relative to local incomes. For context: the average Lisbon apartment now costs €4,500 per square meter, translating to roughly €450,000 for a modest 100-square-meter flat—approximately 15 times the typical annual salary for a teacher or nurse.
The Coalition`s Message: System Failure Requires Intervention
"Já não dá"—we can`t take this anymore—serves as the rallying cry. What began as grassroots tenant organizing in April 2023 has matured into a platform with genuine organizational weight. This weekend`s demonstrations in cities from Funchal in the Azores to Viseu in the interior represent the platform`s sixth major nationwide mobilization. The coalition`s manifesto, delivered Monday to President António José Seguro, reframes the entire housing conversation around Article 65 of the Portuguese Constitution, which guarantees every citizen the right to adequate shelter.
The pitch to the President is unmistakable: treat housing as a national emergency requiring immediate intervention, not a market problem that time will solve.
What the Activists Are Actually Demanding
The coalition`s platform differs sharply from symbolic gesturing. Their requests constitute a policy blueprint:
State-Built Social Housing at Scale. Activists argue that the state should directly construct and manage housing for moderate-income households, mirroring systems in Germany and France. The reasoning: market incentives have produced a capital shortage for working-class shelter because landlords and developers rationally optimize for high-margin properties rather than affordable ones.
Rental Ceilings Tied to Income. The coalition proposes that no family should pay more than a defined percentage of earnings for rent—likely 25-30% based on international norms. This anchors affordability to local labor market conditions rather than applying simple price controls. Spain`s recent housing law implements this logic, capping rent increases at 3% annually in stressed zones.
Mortgage Payment Freeze. Activists demand that monthly loan installments be locked at February 2026 levels, shielding homeowners with variable-rate mortgages from anticipated interest rate spikes.
Tenant Stability Through Longer Leases. Minimum rental contracts of 10 years would reduce the churn that benefits landlords through frequent tenant turnover but destabilizes families. Current Portuguese rental law permits leases to terminate with minimal notice.
Preserve Eviction Protections. The coalition opposes legislative amendments scheduled to accelerate eviction procedures, arguing faster court processing serves landlord convenience at the expense of tenant security.
Tax Penalties for Speculators and Vacant Holdings. The coalition advocates punitive taxation to force 723,000 idle homes into long-term rental markets and eliminate tax breaks rewarding short-term property flipping.
Restrict Short-Term Rentals. Alojamento Local (short-term vacation rentals) have hollowed entire neighborhoods of permanent residents. Historic Lisbon districts and Porto`s Ribeira have been transformed into transient hospitality zones, displacing locals and inflating surrounding rents.
How the Government Responded: Opposite Direction, Same March
On March 12, the Portuguese Council of Ministers approved a housing reform package that explicitly rejects demand-side interventions and doubles down on supply-side assumptions. The core logic: remove friction from landlord operations, and profit incentives will produce more rental inventory.
Accelerated Eviction Procedures. Court processes for removing tenants in default are being expedited, reassuring landlords nervous about non-payment or vacancy periods.
Inheritance Fast-Tracking. New mechanisms—including arbitration outside court systems—permit faster resolution and property mobilization, targeting the backlog of undivided inherited estates currently sitting dormant.
Contractual Autonomy Restored. The government revoked the previous administration`s mandate for state intermediation and coercive leasing, emphasizing landlord-tenant negotiation freedom.
Tax Incentives Restructured. The 2% rent cap that applied to previously rented units was eliminated in September 2025. Landlords now have latitude to raise rents on new contracts without statutory limits. Simultaneously, tenant IRS deductions for rent increased from €700 to €900 in 2026 and will reach €1,000 in 2027.
Emergency Housing Fund Announced. A state safety net for residents facing homelessness has been announced, though funding levels and eligibility criteria remain vague.
The coalition branded these reforms "irresponsible," arguing they recycle failed neoliberal policies that enrich investment funds while punishing working families.
Quick Quiz
Which European country is Portugal`s only land neighbor?
A.MoroccoB.SpainC.FranceD.Italy
Why Vacant Homes Don`t Auto-Fill
Portugal`s housing shortage defies standard market logic. 26,000 new units are constructed annually, far below the 45,000–48,000 demographic analysts calculate are needed. Yet 723,000 properties remain vacant.
Inheritance disputes create legal paralysis—property division among multiple heirs often stalls indefinitely. Speculative hoarding persists: For foreign and domestic investors, Portuguese real estate offers attractive diversification; for locals seeking shelter, it represents unaffordable scarcity. The Alojamento Local conversion diverts residential stock into transient tourism accommodations, hollowing entire neighborhoods.
Regulatory friction also suppresses construction. Zoning restrictions, environmental reviews, and labor costs make new construction slower and more expensive than in competing European markets. Germany targets 400,000 new units annually; Portugal delivers 26,000.
International Context: How Others Regulate Housing
Spain`s 2024 housing law ties rent adjustments to inflation and triggers affordability interventions automatically in stressed zones where housing compromises more than 30% of household income.
The Netherlands introduced a points-based rent ceiling in January 2025, covering 300,000 previously unregulated units and prohibiting temporary contracts except for students and migrant workers.
France mandates that municipalities above 50,000 residents maintain 25% social housing stock. Paris aggressively acquires private properties and converts them into affordable rentals at €6-13 per square meter depending on household income.
The Portuguese government argues such controls reduce supply incentives and prolong shortages. The activist response is that profit-driven markets have already failed to deliver affordability and that constitutional rights to housing supersede investor returns.
What You Can Do: Resources and Next Steps
Tenant Resources: Contact ACE (Associação Condomínial de Estudos) or your local municipality`s tenant assistance office to understand your lease rights. Many municipalities now offer free legal consultations for housing disputes.
Financial Planning: Calculate your housing-to-income ratio. If rent or mortgage exceeds 35% of monthly earnings, document this as you may qualify for government emergency assistance programs or NGO support.
Advocacy: Join local housing coalitions or follow Casa para Viver updates to participate in upcoming consultations with lawmakers.
Short-term Protection: Review your lease terms carefully. If you have a variable-rate mortgage, contact your lender about fixed-rate refinancing options before interest rates potentially rise.
What Happens Next
Parliamentary elections are not scheduled until 2028, giving the Montenegro government breathing room to pursue its supply-side strategy without immediate electoral pressure. However, sustained street mobilization signals that housing anger transcends traditional party politics.
President Seguro holds limited constitutional authority to directly reshape housing policy but retains veto authority over legislation—particularly the eviction law amendments catalyzing this weekend`s protests. A presidential veto would infuriate landlords but could buy time for negotiated compromise.
The European Commission`s Housing Affordability Plan (December 2025) provides a template: member states should increase construction financing, simplify zoning procedures, and coordinate responses to short-term rental excess. Whether Portugal adopts these principles or persists with its market-friendly approach remains unclear.
The Path Forward
The fundamental tension persists: Portugal`s housing market embodies a broader European dilemma about reconciling free-market property rights with a social contract that promises affordable shelter. The Casa para Viver coalition argues that Article 65 resolves the question—housing is a constitutional right superseding investor returns. The government counters that without private capital and construction incentives, there simply won`t be enough homes to shelter anyone affordably.
For residents navigating this impasse, the practical calculus is stark. Expect prices to keep climbing in desirable metropolitan zones. Monitor whether the 723,000 vacant properties ever materialize as affordable rentals or remain speculative holdings. The policy battle will unfold in legislative committees and presidential deliberations, but the financial consequences land directly on household balance sheets across Portugal.
Photo: 90 groups protest housing crisis across 16 Portuguese cities as government removes rent caps and speeds up evictions. Source: The Portugal Post.
‘We are suffocating’: Lisbon and Milan Housing Crisis Protests
Sam Jones, The Guardian
18 Oct 2026
‘We are suffocating’: protests spread to Lisbon and Milan as housing and living cost tensions intensify
Hundreds at Lisbon tent camp demand action, as Giorgia Meloni says march in Italy was exploited by ‘hooligans’
The angry protests that have convulsed Spain and France in recent weeks have spilled over to Italy and Portugal, with rioters clashing with police and setting property on fire in Milan, and a tent encampment springing up in Lisbon over the weekend.
A march in central Milan on Saturday to protest against rising living costs began peacefully but ended with masked rioters throwing stones, paving blocks and other objects at riot police and setting fire to barricades made from bar tables.
Police used water cannon and teargas to disperse the crowds, and images of the aftermath showed a severely damaged carabinieri car.
Milan police clash with protesters on second day of unrest
At least two police officers were injured and about 50 demonstrators, including many minors, were detained, the LaPresse news agency reported.
Italy’s prime minister, Giorgia Meloni, said that while demonstrating was a right, “setting our cities ablaze is not”. In a social media post, she said “hooligans” had exploited the protests “to sow chaos, attack those responsible for ensuring security and to hold entire cities hostage”.
Milan’s centre-left mayor, Giuseppe Sala, said that while “the reasons for the protests were understandable, the violence against law enforcement and serious damage to the city are not justifiable”.
In Lisbon, a tent camp reminiscent of the one established in Madrid three weeks ago was set up by protesters demanding action to tackle the housing crisis and living costs.
Hundreds of protesters rallied at night in Rossio Square – located in the bustling, touristic heart of the Portuguese capital – after a march that had drawn thousands of people nationwide.
The attenders vowed to stay overnight, with hundreds singing songs as they sat around the statue of King Pedro IV that dominates the square.
“The Portuguese social class that pays taxes, that which keeps this country going, is under attack and is losing its rights, notably its right to housing,” said Elena Costa, a 46-year-old social assistant. “So we are all here together to try to explain that we are suffocating.”
Antonio Margado, a 52-year-old engineer, criticised the centre-right government for “a total liberalisation of rents; owners are protected more and more, while tenants who need a house are those who are protected less and less”.
Portuguese housing prices rose by 124% between 2015 and 2024, roughly twice as fast as the EU average, according to official data. The impact is especially harsh on younger people and those in Lisbon – around a quarter of Portugal’s more than 11 million inhabitants live in the capital’s greater metropolitan area.
Saturday’s camp in Lisbon amplified a housing protest that started in the northern city of Porto, where dozens of tents had already been set up.
At the earlier protest in Lisbon called by the main CGTP union, demonstrators called for better public services, pensions and wages as well as measures against soaring housing costs.
Portugal’s prime minister, Luís Montenegro, has said his government understood that people wanted to “express their outrage at what, in their view, may be omissions in public policies”. But he has warned political rivals against “importing into Portugal climates of instability and protest that, in fact, have no support in Portuguese society”, in a likely reference to violent protests in France.
Photo: Protesters in Lisbon. Photograph: Filipe Amorim/AFP/Getty Images.
Portugal: Thousands Protest Rising Living & Housing Costs
Inês Lopes, The Resident
11 October 2026
Thousands protest in Portugal over rising living and housing costs
Demonstrations in Lisbon, Porto and other cities highlight growing frustration over wages, housing affordability and the cost of everyday life
Thousands of people took to the streets of Lisbon and Porto on Saturday, 10 October to protest against the rising cost of living, unaffordable housing and wages that they say are insufficient to meet basic needs.
The demonstrations were organised by the platform “Não dá mais para viver assim” (We can’t go on living like this), which also called protests in Aveiro and Braga.
In Lisbon, crowds gathered at Largo do Intendente, where people of different ages assembled to express their frustration over the increasing financial pressures facing households.
According to Correio da Manhã, the square was already packed shortly before the scheduled start of the demonstration, with protesters highlighting the difficulties of making ends meet.
“The salary is not enough to live on” was one of the central messages of the protests, reflecting concerns about the growing gap between earnings and everyday expenses.
Housing affordability was another major issue, particularly in cities such as Lisbon and Porto, where high rents and property prices have made it increasingly difficult for many residents to find suitable accommodation.
The demonstrations brought renewed attention to the pressures facing working people, young adults and families struggling to balance housing costs with other essential expenses.
According to Público, protesters also referred to similar struggles in neighbouring Spain, highlighting the wider concerns about housing affordability and living standards across the Iberian Peninsula.
The protests reflect mounting frustration over the cost of everyday life in Portugal, where housing has become one of the country’s most pressing social and political issues.
For those taking part, the message was that having a job should provide enough income to afford a home and maintain a reasonable standard of living.
The demonstrations placed renewed pressure on political leaders to address the difficulties faced by households whose incomes are failing to keep pace with their living expenses.
José Manuel Pureza, of the Left Bloc (Bloco de Esquerda), also attended the protest. According to Público, he warned that “more and more people are unable to pay their bills, while a small group of people are making astronomical profits”.
Pureza also criticised the government’s proposed 2027 State Budget, submitted to Parliament this week, describing it as a “blank cheque” for the continuation of the current situation and ruling out abstention in the parliamentary vote. He also called for limits on rent increases.
Isabel Mendes Lopes, of the Livre party, was equally critical of the Budget proposal, accusing Prime Minister Luís Montenegro of “living in a bubble” and governing for people like himself rather than the wider Portuguese population.
She particularly criticised the government’s definition of moderate rent, which can extend to €2,300 a month. “To think that a moderate rent can be as high as €2,300 shows a complete disconnect from the real world and the reality in which most people live,” she said, adding that wages in Portugal remain very low and many households struggle to pay their bills at the end of the month.
According to Público, the organisers are calling for price controls on essential goods and fuel, taxes on windfall profits made by major companies in the banking, energy and retail sectors, and measures to tackle the housing crisis. The platform brings together more than 30 organisations, including trade unions and groups campaigning for housing rights, gender equality, racial equality, climate action and social inclusion.
Sources: Correio da Manhã/Público
Photo: Protesters take part in a demonstration against the rising cost of living and housing crisis in Lisbon on 10 October 2026. Source: Manuel de Almeida/Lusa.
