Fewer rented houses at the beginning of 2025 – but rents rise 10%

The start of 2025 was marked by lower dynamism in the residential rental market, but that didn’t stop house rents from continuing to rise. This is exactly what can be concluded from the data released this Friday, June 27th, by the National Statistics Institute (INE).

In the first three months of 2025, a total of 23,417 new rental contracts for family dwellings were signed in Portugal, a decrease of 10.4% compared to the same period last year — the largest drop recorded in recent years. Compared to the end of 2024, rental activity also fell by 4.2%.

Thus, INE data indicates that fewer homes were rented at the beginning of the year, a time when the home buying market became more attractive — due to increasingly lower interest rates, more competitive mortgage offers, and new support for young people buying a home (such as IMT exemption and public guarantees). Proof of this is that, in the same period, home sales jumped 25% year-on-year, accelerating price growth to 16.3%.

Although the rental market cooled in the country, house rents did not stop increasing — and even accelerated. “In the first quarter of 2025, the median rent for the 23,417 new rental contracts in Portugal reached 8.22 euros/m². This figure represents a year-on-year increase of 10.0%, higher than the 9.3% seen in the previous quarter,” reads the statistical bulletin. Compared to the end of 2024, rents were 2.5% cheaper nationwide.

Evolution of House Rents and New Rental Contracts in Portugal

Year-on-year changes (%)

Source: INE – Created with Datawrapper

Regional Trends

Geographically, the median rent fell only in the Alentejo Central sub-region (-0.4%) over the last year. The Autonomous Region of Madeira (25.3%) and Alentejo Litoral (22.9%) stood out for showing the largest increases in house rental prices.

“The highest rents were recorded in Greater Lisbon (13.16 euros/m²), the Autonomous Region of Madeira (10.44 euros/m²), Setúbal Peninsula (10.24 euros/m²), Algarve (9.92 euros/m²), and the Porto Metropolitan Area (9.12 euros/m²),” according to INE.

As for rental activity, only the Baixo Alentejo sub-region (13.6%) recorded an increase in the number of new contracts in the first quarter. The other 25 sub-regions posted year-on-year declines in new rentals, with the biggest drops in Alto Tâmega and Barroso (-26.8%), Alentejo Central (-24.2%), and Alentejo Litoral (-24.0%).

Rents Rise in Almost All Most Populous Municipalities

Almost all of the 24 municipalities with more than 100,000 inhabitants saw a year-on-year increase in house rents — the only exception was Braga (-0.9%). The largest increases in rental prices were recorded in Gondomar (24.4%), Maia (18%), and Funchal (17.1%).

Rent growth also accelerated in 17 of these populous municipalities, particularly in Gondomar and Funchal. On the other hand, rent increases slowed in 8 municipalities, mostly in the Braga district.

Lisbon (16 euros/m²), Cascais (14.72 euros/m²), and Oeiras (13.89 euros/m²) remain the most expensive municipalities to rent in among the most populous, while Vila Nova de Famalicão is the most affordable (5.75 euros/m²).

Regarding market activity, INE notes that 16 of the 24 municipalities with more than 100,000 residents had year-on-year changes in the number of new rental contracts above the national rate (−10.4%), with Barcelos (4.2%) and Setúbal (3.0%) standing out for the highest increases.

House Rents in Municipalities with Over 100,000 Inhabitants

Data from Q1 2025

Source: INE – Created with Datawrapper