Portugal’s housing crisis is putting pressure on the country’s efforts to make homes more accessible, with new European data showing that house prices have moved increasingly out of step with household incomes over the past decade.
A Nov. 9, 2026, Eurostat release found that Portugal recorded the European Union’s largest increase in its house price-to-income ratio between 2015 and 2025, at 60.8%. The figure places the country at the centre of a wider European affordability debate, even as its government advances changes intended to encourage more rental properties and improve housing supply. Eurostat
The central question is whether policy changes can make housing more accessible to ordinary households, rather than simply making the property market more attractive to owners and investors.
The issue has implications beyond Portugal. Housing affordability has become a major economic and social concern across Europe, while governments face the difficult task of balancing property investment, tenant protection and the need for more homes.
Portugal housing crisis: what the affordability figures show
Eurostat’s house price-to-income ratio measures how property prices have changed relative to household income. It rises when house prices increase faster than income, making home ownership harder to reach over time.
Portugal’s 60.8% increase from 2015 to 2025 was the highest among EU member states in the latest comparison. The Netherlands followed at 34.3%, while Hungary recorded 26.5%, Czechia 25.8% and Spain 24.5%. Eurostat
The figures require careful interpretation. They do not mean that Portuguese houses are 60.8% more expensive than homes in other EU countries. Instead, they show how the relationship between house prices and income changed within Portugal over the measured period.
Eurostat also cautions that the indicator does not rank countries by the absolute cost of housing relative to income. It is a measure of the direction and scale of change, rather than a direct comparison of how much a household must earn to buy a particular property.
Still, the trend matters. When property prices rise faster than earnings, households may need larger deposits, longer repayment periods or additional financial support to purchase a home.
That pressure can also affect the rental market. Households unable to buy may remain tenants for longer, increasing the importance of rental supply, contract rules and protections for people who cannot easily relocate.
Government turns to rental-market reform
Portugal’s government has presented rental reform as part of a broader strategy to encourage more homes to enter the market.
On July 9, 2026, the Council of Ministers approved a proposed reform of the rental framework. The government said the changes were intended to increase housing supply, improve confidence in the rental market and provide a more effective response to families facing housing vulnerability. XXV Governo Constitucional
The proposed changes include greater contractual flexibility for landlords and tenants, adjustments to the rules governing deposits and advance rent payments, and changes to procedures involving the renewal and termination of rental agreements.
The government also proposed simplifying procedures for recovering properties following a court decision in cases involving contractual non-compliance.
These provisions reflect the government’s view that making rental arrangements more predictable could encourage property owners to offer more homes for rent.
However, a more flexible rental framework does not automatically mean lower monthly payments. Its effect on affordability will depend on whether additional properties actually become available, where they are located and whether the asking rents match household budgets.
A housing emergency fund is part of the plan
The July reform also includes a proposed Housing Emergency Fund, or Fundo de Emergência para a Habitação.
Under the government’s announcement, the fund would support individuals and families experiencing housing emergencies, including situations involving the loss of accommodation or domestic violence.
The proposed assistance would cover accommodation or rehousing expenses. The government announcement states that support would be granted automatically within a maximum of 10 days after an application is submitted, with the Institute for Housing and Urban Rehabilitation (IHRU) managing the fund in coordination with Social Security and other public entities. XXV Governo Constitucional
The proposal also retains specific protections for certain vulnerable tenants with rental contracts signed before 1990. The government said this group includes people older than 65 and people with a disability level equal to or greater than 60%.
For those qualifying households, rent adjustments would only be allowed when annual household income exceeds €64,000, under the terms described in the government announcement. XXV Governo Constitucional
The distinction is important: measures designed to encourage landlords to rent out properties address the supply side of the market, while emergency assistance and protections for vulnerable tenants address the immediate risk of losing a home.
Both are relevant, but they solve different problems.
Parliament’s decision is not the end of the process
The rental reform has also moved through Portugal’s legislative process.
The government submitted Proposal of Law 103/XVII/1 to Parliament on Aug. 12, 2026. Parliament admitted it on Sept. 1 and assigned it to the Committee on Infrastructure, Mobility and Housing. parlamento.pt
On Sept. 30, the proposal passed its generality vote. The parliamentary record lists votes in favour from PSD, IL and CDS-PP, votes against from PS, L, PCP, BE, PAN and JPP, and an abstention from CH.
The proposal was then referred to the relevant committee for consideration at the detailed stage. parlamento.pt
That distinction matters for readers. Approval in generality means Parliament accepted the proposal as a basis for further consideration. It does not, by itself, establish that every provision has completed the legislative process or entered into force.
The official parliamentary record therefore remains important for determining which provisions are still under review and when any final legal changes become applicable.
More construction is another part of the affordability strategy
Rental reform is not the only measure in the government’s housing programme.
On March 27, 2026, the Council of Ministers announced measures intended to increase housing supply for both rental and purchase markets. The package included tax incentives for moderate-rent housing, a reduced VAT rate for qualifying construction projects and changes intended to simplify urban planning and building procedures. XXV Governo Constitucional
The government also outlined a process intended to help unlock properties held in joint ownership, which can remain outside the market when co-owners cannot agree on what to do with them.
The broader strategy is based on the idea that additional supply can help moderate prices over time.
But increasing the number of homes is not the same as guaranteeing affordability. New properties must be built in places where people need them, and their final prices must be within reach of the households the policies are intended to assist.
The same challenge appears in other property markets. WWC ONE MEDIA has examined how unsold Philippine condominiums could potentially be redirected towards affordable housing. The comparison is not a claim that the two countries have identical housing systems; it illustrates why available residential inventory does not automatically translate into homes that ordinary families can afford.
The debate also connects with Spain’s housing affordability and labour concerns, where housing has become part of a wider discussion about wages and living costs. In Britain, the affordability limits of a government-backed homeownership scheme have also highlighted the gap between assistance programmes and the properties buyers can actually afford.
What happens next
Portugal’s next test is implementation.
The government’s stated goals include encouraging more rental supply, simplifying procedures, improving access to housing and providing emergency support for vulnerable households. Parliament’s legislative process will determine the final form of the rental reform, while the impact of supply-side measures will take time to assess.
The most meaningful indicators will go beyond the number of policies announced. They will include whether more homes become available for long-term rental, whether rent levels become more manageable relative to income and whether households facing housing emergencies can access support.
Eurostat’s latest figures provide a clear warning about the scale of the affordability challenge. They do not, on their own, establish which policy will work or how quickly conditions can improve.
For Portugal, the measure of success will ultimately be whether households can secure stable housing without spending an increasingly difficult share of their income.
Frequently asked questions
1. Why is Portugal facing a housing affordability problem?
Eurostat recorded a 60.8% increase in Portugal’s house price-to-income ratio between 2015 and 2025. This indicates that house prices rose substantially relative to household income over that period.
2. Does the 60.8% figure mean Portuguese homes are 60.8% more expensive than other EU homes?
No. It measures the change in the relationship between house prices and household income within Portugal. It is not a direct comparison of property prices between countries.
3. What rental reforms has Portugal proposed?
The government’s July 2026 proposal includes greater contractual flexibility, changes to rental deposits and advance payments, revised procedures for contract termination and eviction following court decisions, and a proposed Housing Emergency Fund.
4. Has Portugal’s rental reform become law?
The government’s Proposal of Law 103/XVII/1 passed its generality vote on Sept. 30, 2026, and was referred to the relevant parliamentary committee for detailed consideration. That vote alone does not mean the entire proposal has completed the legislative process.
5. Will building more homes automatically make housing affordable?
No. Additional supply can help, but affordability also depends on location, construction costs, financing, rental prices and household incomes. New homes must be accessible to the people who need them.
