The Rent
The heaviest bill the young Portuguese face is not sent by the State. It is the price of a home, which has more than doubled in real terms since 2013 while their pay has not, and which transfers wealth, every month, from those who need to buy or rent to those who already own. Set against it: the best educated generation in the country’s history, a labour market that has recovered from the crisis, and poverty rates that are now no higher for the young than for the old.
The first part of this essay, The Inheritance, read the State’s side of what the young inherit: the public debt, the public capital left to wear out, and the pension promises. It found that the debt everyone argues about is falling and that the larger burdens are elsewhere. This part looks at the market: what it costs a young Portuguese adult to find a home and start a working life, and who is on the other side of those transactions.
A price is not a tax. Nobody legislated the rent in Lisbon. But when the price of a necessity rises much faster than incomes, the effect on those who must buy it is the same as a tax, and the proceeds go to those who already own it, who are mostly older. That makes housing the clearest case of a transfer between generations that no one voted for. The labour market is the other half of the picture, and it is more mixed than the usual story allows.
A home, then and now
Portuguese house prices, adjusted for inflation, fell by about a third between 2000 and 2013. They then more than doubled: by 2025 the OECD’s real house price index for Portugal stood 2.2 times its 2013 level and 50 per cent above its previous peak, and it has kept rising in 2026. On the same index, 2015 = 100, Spain was at 143 in 2025, France at 104 and Italy at 95 (Figure 1).[1]
The better measure of affordability is the price relative to income, and here the history needs care. In the mid-1990s Portuguese houses were expensive relative to incomes too, at a time when mortgage rates were far higher; the ratio fell for almost twenty years and bottomed out in 2013. It passed its 1995 level in 2024, and in 2025 it was a third above its long-run average and higher than at any point since the series began.[1] Rents on new contracts have followed: the national median for leases signed in early 2026 was €9.46 per square metre, 9 per cent more than a year earlier, and €17.42 in the municipality of Lisbon.[2]
Translated into wages, at the median bank valuation of December 2025, €2,081 per square metre, a 90 m² home costs about €187,000: nearly 14 years of the median base wage, and about 15 and a half years at the median pay of workers under 30. In Lisbon the same home costs about 30 years of the median wage. A 70 m² flat rented at the national median for new leases costs about €660 a month, two-thirds of the median gross base wage; in Lisbon, about €1,220, more than the whole of it.[3][4] These are illustrative calculations, but no plausible variation of them makes a first home affordable on a single median wage in the cities where most of the jobs are.
Living with parents
The most visible consequence is that young Portuguese adults leave home late. The estimated average age of leaving the parental home was 28.8 in 2025, two and a half years later than the EU average and about the same as twenty years ago. Of people aged 25 to 34, 42 per cent lived with their parents in 2025, against 30 per cent in the EU; the share rose to 56 per cent in 2021, during the pandemic, and has fallen since. Spain and Italy are higher still; France and Germany are far lower (Figure 2).[5]
This is a southern European pattern with deep roots in family life as well as in prices, and it cannot all be put down to housing. But the rise from 39 per cent in 2005 to 45 per cent in 2019, before the pandemic, happened while prices were rising, and the young who have left home live in smaller spaces: the share of people aged 25 to 29 in overcrowded dwellings went from 12 per cent in 2019 to 19 per cent in 2025.[5] A low housing-cost burden among the young in the statistics, 8 per cent of those aged 25 to 29, mostly reflects the fact that many of them are not paying for housing at all.
Who is on the other side
Every rise in house prices is a gain for someone. The household wealth survey shows who. In 2024 only 38.5 per cent of households headed by someone under 35 owned their home; from age 45 onwards it was about 75 per cent.[6] The median net wealth of households headed by someone under 35 was €35,000; that of households aged 65 to 74 was €186,000 (Figure 3). Households under 35 are about a tenth of all households and hold about 4 per cent of household net wealth; those aged 55 and over hold more than 60 per cent. Median household wealth rose by 29 per cent in real terms between 2020 and 2024, and the survey attributes the rise mainly to house prices.[6]
Young households did gain: their median wealth more than doubled between 2017 and 2024, from a very low base, and those who bought before 2015 are among the winners. Age is not the only line: a young adult whose parents own two flats is on the other side of the transaction too, and will be more so when they inherit. That is part of what the OECD means when it writes that the Portuguese housing tax mix “contributes to intergenerational inequality”: capital gains on housing are lightly taxed and transfers to spouses and children pay no inheritance tax, so housing wealth passes down within families rather than across them.[7]
The supply side explains why prices rose so much. The OECD notes that in 2021 12 per cent of Portuguese dwellings were vacant and 19 per cent were second or holiday homes, the highest shares in the OECD, while the building of new homes had collapsed. Completions of new dwellings fell from about 126,000 in 2002 to 7,100 in 2015, a fall of more than 90 per cent, and in 2025, at about 27,000, were still a fifth of the level of the early 2000s (Figure 4).[7][8]
Demand came from tourism, foreign buyers and, until 2022, near-zero interest rates: the average rate on new Portuguese mortgages was 0.84 per cent at the end of 2021 and 4.18 per cent two years later.[9]
Helping the young buy
Governments have responded, mostly by helping the young pay the price rather than by lowering it. Since August 2024 buyers aged 35 or under pay no property transfer tax or stamp duty on a first home up to about €317,000, rising each year; on a €200,000 home the OECD puts the saving at about €5,600. It cost €116 million in its first five months.[10] Since the same summer the State has guaranteed up to 15 per cent of the price of a first home for buyers aged 18 to 35, allowing loans of up to 100 per cent of the value. By early 2026 about 32,000 such loans had been made, a quarter of new mortgages for owner-occupied homes; 85 per cent of them were at exactly 100 per cent of the value, and, by the central bank’s measure, the share of new loans classed as high risk rose from 3 to 21 per cent. Buyers aged 35 or under took 56 per cent of new owner-occupier mortgages in the first quarter of 2026, against 40 per cent in 2024. The central bank’s own assessment is that the guarantee “may contribute to rising prices”, and from August 2026 it has tightened its lending rules.[11] On the rental side the Porta 65 programme supported about 28,000 young tenants in 2023.[7]
The difficulty with subsidising demand when supply is fixed is well known: the subsidy tends to end up in the price. A recent study of the transfer-tax exemption reports exactly that for Portugal, with the benefit showing up in asking prices within months.[12] The IMF, in its 2026 consultation, recommended winding back support for demand that is not targeted at those in need.[13] To the extent that it is capitalised, a subsidy to young buyers is, in the end, a subsidy to the older sellers.
Starting out
The labour market side is less bleak than its reputation, and has improved. Youth unemployment, 39 per cent among those aged 15 to 24 in 2013, was 19.5 per cent in 2025; the share of 15-to-29-year-olds neither in work nor in education fell from 16.5 to 8 per cent, now below the EU average of 11.[14] Temporary contracts remain more common than in Europe, and were for most young workers in the crisis years: 68 per cent of employees aged 15 to 24 had one in 2015. By 2025 it was 50 per cent, close to the EU’s 47, and 23 per cent among those aged 25 to 34, against 17 (Figure 5).[14]
Pay is the stranger story. Relative to other workers, the young have not lost ground: the median hourly pay of workers under 30 rose from 80 to 89 per cent of the all-age median between 2006 and 2022, and in real terms it rose by 14 per cent while that of workers over 50 fell by 11.[15] The rising minimum wage has compressed the whole scale. What the young have lost is the reward for experience and qualifications: the premium of a degree over secondary education fell from 54 per cent in 1996 to about 42 in 2021.[16] And the level is low: in purchasing power, young Portuguese workers earn about half what young workers earn on average in the EU.[15] Being paid nearly as much as older colleagues is not much consolation when everyone is paid little and the rent is set in a European market.
Many answered by leaving (Figure 6). Emigration rose from 20,000 to 40,000 a year at the start of the century, depending on the estimate, to a peak of about 120,000 to 135,000 in 2013–2014 and was still 65,000 to 80,000 in 2024. About 1.8 million people born in Portugal live abroad, equivalent to 17 per cent of the resident population.[17] Estimates of what the country loses in the education of graduates who leave circulate widely, but none that we could find has been published in a form that can be checked.
What the young have that their parents did not
Two things weigh on the other side. The first is education. In 2000, 13 per cent of Portuguese aged 25 to 34 had a degree; in 2025, 42.5 per cent did, close to the EU average, against 20 per cent of those aged 55 to 64.[18] The generation that faces the housing market is the first in Portuguese history to have been educated at the level of the European average, at public expense.
The second is that the gap in living standards between young and old, which opened in the crisis, has closed. In 2004 the median income of adults aged 18 to 24 was 31 per cent higher than that of people aged 65 and over; by 2014 it was 7 per cent lower, and in 2025 it was 6 per cent higher again. The poverty rate of young adults rose from 19 per cent in 2008 to 26 in 2014, while that of the elderly fell to 15; in 2025 both were about 18 (Figure 7).[19] The crisis fell hardest on the young. The recovery has undone most of that, except in housing.
The bill, itemised
Put the two parts of this essay together and the bill the young Portuguese face reads like this. From the State: a public debt that is large but falling, public capital that was allowed to wear out for a decade, and pensions that will replace a smaller share of their wages than today’s. From the market: homes that cost twice as much in real terms as a decade ago, bought from or rented from an older generation that owns most of them, with public help that may end up in the sellers’ pockets. From the labour market: pay that has kept up with older workers’ but not with prices at home or wages abroad, and a door that hundreds of thousands have used to leave.
Against it: the best education any Portuguese generation has had, a labour market that has recovered from the crisis, living standards that are no longer below those of the old, and, for many, an inheritance to come. The largest single item is housing, and it is the one where the transfer between generations is most direct, least visible and least chosen. It is also the one that policy could most change, by building, and has so far mostly chosen to subsidise.
This piece was written collaboratively with Claude Opus 5.5 (Anthropic): human specification, editorial direction and critical review; machine data research, analysis and drafting. The figures and derived numbers are computed by scripts/generations.py, shared with the first part, from the OECD’s analytical house price indicators, Eurostat’s EU-SILC and Labour Force Survey tables, INE’s bank valuation and rent statistics, the household wealth survey of the Banco de Portugal and INE, the Emigration Observatory and the Banco de Portugal’s Financial Stability Report. The years-of-wages and rent calculations are the author’s illustrations, with the dwelling sizes assumed as stated. The 2024 wealth figures use the corrected household weights published in August 2026. The downloaded sources, with a table or page reference for every number, are kept with the script’s data; results are in docs/generations-results.json and the figures in docs/generations-figures.html.
The cover photograph is Apartment buildings on outskirts of Lisbon, Portugal by Philip Mallis; CC BY-SA 4.0, via Wikimedia Commons, cropped.
Authored by: Luis Matos Ferreira — Physicist, Developer, Writer
- The Inheritance — Part I: public debt, public capital and pensions.
- The Two-Thirds Country — Portugal’s productivity, hours, wages and housing.
- Earned and Unearned — the split of income between work and capital, and how each is taxed.
- The Sustainability Story — the Portuguese pension system and its forecasts.
- OECD, Analytical house price indicators (DSD_AN_HOUSE_PRICES@DF_HOUSE_PRICES): real house prices, price-to-income and price-to-rent ratios, Portugal and comparators, 1970–2026, retrieved September 2026.
- INE, Estatísticas de rendas da habitação ao nível local, 1.º trimestre de 2026, 26 June 2026, pp. 1 and 4–5.
- INE, median value of bank valuations for housing (indicator 0012248), December 2025, via dados.gov.pt.
- GEP/MTSSS, Quadros de Pessoal 2024, median monthly base wage; Eurostat, Structure of Earnings Survey 2022 (earn_ses_pub2a), median hourly earnings by age; author’s calculation.
- Eurostat, estimated average age of young people leaving the parental household (yth_demo_030); share of young adults living with their parents (ilc_lvps08); overcrowding and housing cost overburden rates by age (ilc_lvho05a, ilc_lvho07a).
- Banco de Portugal & INE, Inquérito à Situação Financeira das Famílias 2024, press release of 28 May 2026 (Quadro 3, pp. 1, 4 and 6) and annex tables with corrected weights, August 2026 (Tables A1 and A4); ISFF 2017, Quadro 2.
- OECD, OECD Economic Surveys: Portugal 2026, January 2026, chapter on housing, pp. 107, 116–121 and 135 (PDF pages), and p. 46.
- INE, dwellings completed in new residential buildings, 2000–2025, via PORDATA; INE, Estatísticas da Construção e Habitação 2024.
- European Central Bank, MFI interest rate statistics, Portugal, new loans to households for house purchase.
- Decreto-Lei n.º 48-A/2024, de 25 de Julho; Relatório da Despesa Fiscal 2024, pp. 41 and 43.
- Decreto-Lei n.º 44/2024, de 10 de Julho; Banco de Portugal, Relatório de Estabilidade Financeira, May 2026, pp. 25 and 64–68; Banco de Portugal, Recomendação Macroprudencial 1/2026.
- Clemente-Casinhas & Vale, “Exemption or illusion?”, Real Estate Economics, 2026, doi:10.1111/1540-6229.70020, as reported in the Portuguese press, January 2026.
- International Monetary Fund, Portugal: 2026 Article IV consultation, concluding statement, May 2026.
- Eurostat, Labour Force Survey: unemployment by age (une_rt_a), young people neither in employment nor in education and training (edat_lfse_20), temporary employees by age (lfsa_etpgan).
- Eurostat, Structure of Earnings Survey 2006–2022 (earn_ses_pub2a), median hourly earnings by age, in euros and purchasing power standards; deflated by the HICP (author’s calculation).
- PlanAPP, Nota de Análise 11, 2024, pp. 15–18, based on Quadros de Pessoal.
- Observatório da Emigração, Emigração Portuguesa 2025: Relatório Estatístico, Quadro 1.3 (p. 32) and p. 34.
- Eurostat, population by educational attainment (edat_lfse_03), tertiary education, ages 25–34 and 55–64.
- Eurostat, EU-SILC: median equivalised net income by age (ilc_di03) and at-risk-of-poverty rate by age (ilc_li02).
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