Rental Vacancy Rates in Lisbon Plunge—Here’s Why Competition is Tougher Than Ever

Lisbon’s rental market squeezed tighter in June, with the citywide vacancy rate dipping below 1.3%, the lowest since records began in 2012 according to data published this week by the Associação dos Profissionais e Empresas de Mediação Imobiliária de Portugal (APEMIP). For would-be tenants, securing an apartment in city hotspots has become a race against time—and against dozens of rival renters per listing.

Rents Soar, Listings Plummet

The low vacancy rate comes at a time when demand remains white hot. Summer means an influx of students finalizing leases ahead of the new term at Universidade de Lisboa and ISCTE, while digital nomads—drawn by the city’s tech boom and international reputation—snatch up mid-range flats before long-term residents can even view them. In key neighbourhoods like Príncipe Real and Arroios, crowds snake down the pavement outside open houses most evenings. Ana Simão, an estate agent based on Avenida Almirante Reis, reported 70 viewings in a single afternoon for a single T2 unit last week.

The competition has started to upend the affordability equation: the typical T1 flat now rents for €1,450 monthly in the city centre, up 11% year-on-year, with similarly steep increases in Graça, Campo de Ourique, and even pockets of previously more affordable Benfica. Long-term residents complain on social media about feeling priced out. Meanwhile, Casa Lisboa’s June report revealed the number of available listings citywide dropped by 17% compared to last year.

What’s Fueling the Crunch?

Multiple factors combine to drive vacancy rates down. Short-term letting continues to siphon off supply: whilst a 2023 city ordinance aimed to clamp down on illegal Airbnbs, enforcement has been spotty, especially in popular tourist enclaves bordering Alfama and Cais do Sodré. At the same time, tight mortgage markets and tough new bank lending criteria introduced by Banco de Portugal in April have delayed many younger professionals from entering the buying market, keeping more prospective buyers in rental properties for longer.

According to numbers published by Idealista in late June, only 535 properties were actively listed for rent within a five-kilometre radius of Marquês de Pombal on June 30—the lowest midyear tally since 2014. By contrast, more than 2,000 new build units are in the approval pipeline according to Câmara Municipal records, but most won’t be available before late 2027.

Competition Set to Remain Intense

Experts warn the squeeze will likely persist. Barring a sharp uptick in approved rental developments, demand is forecast to outstrip supply again through 2027—especially if macroeconomic uncertainty in neighbouring Spain and France continues to spur expat arrivals. For those searching now, agents advise being ready to provide proof of income at the first viewing and to expect upfront deposits of up to three months’ rent for T1 and T2 flats. Some landlords, particularly in São Vicente and Estrela, have begun requesting references from previous owners—something rarely seen in Lisbon five years ago.

For renters struggling to break into competitive areas, local tenant associations recommend broadening searches to outlying districts such as Olivais or Beato, where supply is thinner but prices are on average 20–25% lower than central Lisbon. The coming months could bring more city-led policy tweaks, but for now, Lisbon’s race for rentals remains a tough contest with steep entry hurdles.