Why Lisbon Tops the List: A Deep Dive into Europe’s Worst Rent-to-Salary Ratio - and What It Means for Investors
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When new international housing market analyses are released, Lisbon unfortunately finds itself leading a list no European city wants to top: the highest rent-to-salary ratio in Europe.
According to Deutsche Bank’s Mapping the World’s Prices 2025 report, the average worker in Lisbon now spends 116% of their net salary on rent for a one-bedroom apartment in the city centre. In practice, this means that for a large segment of the population - especially young people and low-income workers - renting even a modest apartment in the capital is financially out of reach.
For comparison:
London: 75%
Barcelona / Madrid: 74%
Milan: 72%
Rome: 65%
Athens: 57%
Amsterdam: 50%
Copenhagen: 43%
Geneva: 29%
These are not just extreme numbers, this is a structural imbalance that affects economic growth, social mobility, and long-term market stability.
How Did We Get Here? A Brief Market Evolution
1. Salaries have not kept up with housing prices
While wages in Portugal have grown slowly, Lisbon’s housing prices have increased by over 90% in the last decade, and rents have risen even faster.
2. High demand meets restricted supply
Lisbon has become a hotspot for foreign buyers, investors, remote workers, and digital nomads. At the same time, new construction has lagged behind EU standards.
The result: predictable upward pressure on rents and prices.
3. Regulatory bottlenecks
Long PIP approval times, complex licensing processes, restricted densification zones, and high construction costs slow down development.
4. A growing middle class without access to financing
Many young people in Portugal have stable incomes but lack the necessary down payment to buy. This forces them to remain tenants longer - intensifying pressure on the rental market.
Why Investors Should View This as an Opportunity, Not a Crisis
When a population cannot afford to live in its own city, a clear structural need emerges. One that doesn’t disappear on its own.
The market demand is obvious:
More mid-priced, accessible housing in Lisbon
New financing models that allow young people to buy rather than rent
Modernised, scalable property development structures
For investors, this creates a long-term, stable, socially conscious investment opportunity.
How to Build Housing That Is Both Affordable and Profitable
1. Target the mid-market segment
Not luxury. Not social housing.
The underserved “middle” segment:
1–3 bedroom units, 45–85 m², energy-efficient, well-designed, and realistically priced.
This category is almost nonexistent in Lisbon’s new-build pipeline.
2. Construction optimisation without compromising quality
Industrialised construction (CLT, modular concepts, timber structures), streamlined project management, and efficient logistics can reduce costs by 10–20%.
In a high-demand market, these savings make a significant impact.
3. Improve financing accessibility: Tokenization as a breakthrough tool
This is where the future lies.
Tokenization - A New Path for Young Buyers
Tokenization divides a real estate project into digital ownership units (tokens) that investors can purchase. It opens new doors for both developers and buyers.
Benefits for Investors
Invest without owning the entire asset
Lower entry barriers (e.g., €1,000 per token instead of €1M)
Broader portfolio diversification
Improved liquidity via approved secondary marketplaces
Benefits for Young Buyers
They can accumulate ownership before moving in
Part of their down payment can be built through tokenized equity
They progressively buy “shares” in their future home
Once their equity reaches a threshold (e.g., €15,000 – €20,000), a bank can finance the remaining amount
This directly addresses the primary barrier preventing young Portuguese from buying a home: lack of initial capital.
How This Works in Practical Terms
Example:
Apartment price: €260,000
Traditional down payment (20%): €52,000
Most young buyers cannot save €52,000.
With a tokenized model:
Buyers begin purchasing tokens for €100–€300 per month
Their equity grows with project appreciation
Their future purchase price can be locked in (hedge against inflation)
Once they reach an agreed equity level (e.g., €18,000), they qualify for financing
For investors, this means:
Faster pre-sales
Lower market risk
More predictable exit routes
This model activates a completely new buyer segment that is currently excluded from the market.
Why This Is a Strong Long-Term Investment Strategy
Lisbon continues to show:
Consistent population growth
Persistent high demand in the mid-market segment
Limited new supply
Rising rents outpacing wage growth
A government under pressure to expand Affordable Housing
EU funds supporting innovative housing solutions
When social need and market opportunity converge, the result is one of the most resilient investment categories available.
This opportunity is not cyclical - it is structural.
Conclusion: The Opportunity Is Now
No other EU capital has a rent-to-salary ratio close to Lisbon’s.
This signals:
A severe market imbalance
A clear gap between supply and demand
A long-term opportunity for investors who focus on delivering accessible, well-designed housing
Investing in mid-market residential projects in Lisbon is not just profitable;
it is part of the solution.
This is not a problem.
It is an opening.
A strategic window.
A chance to build homes that create both returns - and genuine impact.
Reach out, let’s have a talk
