Portugal’s Housing Crunch Needs Structural Reform, Says CBRE — What Buyers and Investors Must Know

Portugal’s property crunch: why tinker won’t do

Portugal's property market is in urgent need of a structural overhaul, according to CBRE’s new study Oikos – The Long Game for the Portuguese Residential Sector. The headline is stark but accurate: simple supply increases will not fix the problem. In our analysis, the interaction of demographics, taxation, regulation and an ageing housing stock has produced a market that is both overbuilt in absolute terms and extremely tight where it matters most.

This article breaks down the report’s main findings, explains what they mean for buyers, landlords and developers, and outlines practical steps that policymakers and investors must consider if housing affordability and supply are to improve.

The paradox: more homes than households, yet an acute shortage of available housing

It sounds counterintuitive: Portugal has one of the highest ratios of dwellings to households in Europe. But the distribution and use of that stock leave many families without access to a primary residence.

• Total dwellings: 5.97 million
• Households/families: 4.1 million
• Share of stock not used as main residence nationally: 31%
• Share in Lisbon and Porto metro areas: ~20% in each

Those figures explain why adding headline construction numbers will not automatically restore accessibility. A large share of the existing stock is held as secondary homes, short-term rentals, empty units or properties held off-market for capital appreciation. That creates an artificial scarcity of housing available for people who need a stable primary residence.

In plain terms: the market has a lot of bricks, but not enough of the right bricks in the right places.

Demographics are driving demand in unexpected ways

CBRE highlights a demographic trend that few politicians have treated as central to housing policy: Portugal’s fertility rate has declined for decades, leaving an ageing, shrinking native-born population. Since 2016, net immigration has been the sole driver of population growth. That influx has two effects.

First, it supplies labour and Social Security receipts. Second, and less discussed, it creates immediate housing demand that the current market cannot absorb quickly.

• Net migration in 2023: +144,000 people

The mismatch produces urgency. Immigrants need primary residences. If those homes are not available, pressure is placed on rental markets and on entry-level segments of the sales market, driving prices and rents up.

For investors, this demographic shift means that areas with employment and social infrastructure will see sustained demand for mainstream housing rather than luxury or tourist-facing product.

The affordability gap: wages versus valuations

Affordability is not a story about prices alone. It is about prices relative to incomes and to mortgage finance terms. CBRE’s numbers highlight how salaries have failed to keep pace with property valuations.

• Average net salary (Portugal) in 2024: €1,266 per month
• Median bank valuation (national): €1,721 per m²
• Lisbon median valuation: €2,523 per m²

CBRE calculates that buying a 50 m² apartment in Lisbon requires roughly 90 months of average net salary today, up from 61 months in 2011. That is a major erosion of affordability over a decade.

What this means in practical terms:

• First-time buyers face a steeper income gap, pushing them into the rental market longer or forcing relocation out of core cities.
• Rents rise as homeownership becomes less accessible, which feeds back into housing insecurity for lower-income households.
• Mortgage-to-income ratios and loan servicing capacity become risk factors for banks and buyers in future rate cycles.

Investors should expect higher demand for rental product aimed at middle-income tenants and for developments that reduce per-unit acquisition cost through design and typology changes.

Construction volumes and the licensing bottleneck

Output on the ground is far below demand. In 2024 only 27,000 new homes were delivered, whereas 170,000 new housing transactions took place in the same year. Historical context sharpens the problem: construction volume is still well below the 113,000 units recorded in 2000.

Two factors are central:

1. Low build permit throughput and licensing delays. Complex and slow municipal procedures inflate time-to-market and development costs. Developers respond by targeting higher-margin segments where bureaucracy can be absorbed.
2. Regulatory and fiscal incentives that discourage long-term rental. Historical policies created disincentives to renting instead of selling, which reduced the effective supply of long-term stock.

Streamlining planning and permitting can shorten project timelines and lower costs, but only if paired with a regulatory framework that restores landlord confidence and predictable fiscal rules.

What CBRE recommends: a new public-private balance

CBRE argues for a structural shift in how housing policy is designed and executed. Its proposals can be summed up as state-led de-risking plus greater private-sector responsibility.

Key policy prescriptions from the report:

• Make demographics a top policy priority. Use incentives to stabilise birth rates and reduce long-term dependency ratios.
• Reform rental regulation. Move away from historical freezes toward a stable, predictable regime that gives landlords confidence to invest in long-term rental supply.
• Reduce bureaucratic friction. Simplify licensing, provide fiscal stability, and speed up legal dispute resolution to accelerate delivery.
• Shift the market focus from scarcity to product quality. Support the development of housing typologies that match current household structures, including the growing share of single-person homes (about 25% of households).

I agree with CBRE that the State cannot fix the market by spending alone. Regulatory clarity and faster approvals are prerequisites for the private sector to deliver at scale.

Implications for investors, buyers and developers

The study changes how we should think about opportunity and risk in Portuguese real estate.

For investors:

• Demand will be strongest for mid-market rental stock in employment hubs, not for speculative luxury projects in saturated tourist districts.
• Value will come from product differentiation: efficient floorplates, smaller unit sizes adapted to single-person households, flexible layouts and lower operating costs.
• Political risk is real; reforms may alter tax and rental rules.