From Lisbon to Milan: housing costs always rising in Southern Europe

The residential market in Southern Europe continues to see price increases, both for sales and rentals, worsening access to housing.
Portugal has once again become the country with the most expensive homes to buy and rent, with Lisbon standing out in particular. However, it was Spain that recorded the highest increases in housing costs in both markets over the past year. In contrast, house prices in Italy remain far from the peak levels observed more than a decade ago, although rents reached record highs in the second quarter of 2025, according to data from idealista.

Lisbon remains the most expensive city to buy a home
What is the rental situation in Portugal, Spain, and Italy?
Tourist destinations in Southern Europe: how much does it cost to buy or rent a home?

Lisbon remains the most expensive city to buy a home
Currently, Portugal has the highest median cost of homes for sale (€2,898/m²), ahead of Spain (€2,438/m²) and Italy (€1,828/m²). Among the three Southern European countries, only the Portuguese and Spanish markets reached new record highs in June in idealista's historical series. But it was in Spain where the biggest annual increase in house prices was observed (+14%), followed by Portugal (+8%) and Italy (+1.5%).

An analysis of the main capitals of Southern Europe reveals upward pressure on house prices in the most dynamic cities, due to the widespread shortage of supply. Lisbon remains the most expensive city to buy a home, with the median price reaching a new high of €5,769/m² in June, after growing by 2.3% over the past year. Madrid is also catching up with the Portuguese capital: house prices rose by 25% in one year, reaching a new record of €5,642/m².

Milan ranks third, also with sale prices above €5,000/m² (though slightly below its all-time high). It is also evident that Barcelona is nearing this threshold, reaching new records (€4,920/m²), after prices rose by 11.1% in a year. Porto remains behind in terms of prices (€3,792/m²), although it too reached a new high. The most affordable city for buying a home is Rome, with €3,215/m² — a price nearly 25% below its peak.

House prices in major Southern European cities
Median house prices in Q2 2025 (€ per m²)
Price variation between Q2 2025 and the same period of the previous year (%)

Source: idealista price report – June 2025
Cities with record-high prices are in bold

What is the rental situation in Portugal, Spain, and Italy?
In the rental market too, Portugal is the most expensive country in Southern Europe, with a median monthly rent of €16.7/m². It is followed by Italy (€14.9/m²) and Spain (€14.6/m²), both at record levels. The annual rise in rental prices was particularly strong in Spain (+9.7%), which was three times higher than in Portugal (+3.5%) and nearly double that of Italy (+5.5%).

In this market, Barcelona and Milan top the list, with median monthly rents of €23.9/m² and €23.7/m², respectively. Next come Lisbon (€22.2/m²) and Madrid (€22/m²). Rome and Porto, in turn, show more moderate rental prices.

The largest annual rent increases occurred in Rome (+12%) and Madrid (+11%), though only the Spanish capital reached a record rental price. Lisbon and Porto showed more moderate increases of 3.1% and 2.7%, respectively. Milan had the smallest price increase (2.6%) among the six main markets analysed.

Rental prices in major Southern European cities
Median rents in Q2 2025 (€ per m² per month)
Price variation between Q2 2025 and the same period of the previous year (%)

Source: idealista price report – June 2025
Cities with record-high prices are in bold

Tourist destinations in Southern Europe: how much does it cost to buy or rent a home?
Major holiday destinations in Southern Europe show varied price trends for houses for sale. It was in the tourist areas of Portugal and Spain where the biggest price increases occurred, while in the Italian market there were more moderate increases or even downward adjustments.

Valencia (Spain) recorded the biggest rise in house prices over the past year (+20.1%), followed by Setúbal (+20%), Palma (+18.4%), and Beja (+17.8%). All Portuguese tourist destinations analysed saw price increases. On the other hand, in Naples and Genoa (Italy), sale prices slightly declined.

Among the holiday destinations analysed in Portugal, Spain, and Italy, Palma recorded the highest house prices (€4,907/m²) — a new record. It is followed by Funchal, with prices reaching a record €3,645/m². Málaga ranked 4th (€3,459/m²), and Faro 5th (€3,285/m²).

The most affordable places to buy homes among tourist destinations are Beja (Portugal) at €1,278/m² and Palermo (Italy) at €1,383/m², according to the same idealista data from Q2 2025.

House prices in tourist cities in Southern Europe
Median house prices in Q2 2025 (€ per m²)
Price variation between Q2 2025 and the same period of the previous year (%)

Source: idealista price report – June 2025
Cities with record-high prices are in bold

In the rental market, Faro led the price increase over the past year (+12%), followed by Palermo (+11.1%) and Setúbal (+11%). Rental prices rose across all holiday regions in Southern Europe, with Naples showing the smallest increase (+1.5%).

The highest rents are found in Spain, particularly in Palma, Málaga, and Valencia, which recorded new record prices of €18.3/m², €15.6/m², and €15.5/m², respectively.

Among Portuguese cities analysed, Funchal (€15/m²) and Faro (€14.2/m²) have the highest rental costs. However, only Setúbal reached a new all-time high in June, with median rents at €13.1/m² per month. Beja remains the most affordable at €10.1/m².

Rental prices lower than in Beja can still be found in two Italian destinations: Genoa (€10/m²) and Palermo (€9.1/m²), the same data shows.

Rental prices in tourist cities in Southern Europe
Median rents in Q2 2025 (€ per m² per month)
Price variation between Q2 2025 and the same period of the previous year (%)