Living in Portugal is worse than you think. Just 10 years ago, you could buy a home in Lisbon for €1,000 per square meter. Today, that same space would cost you over 2,000, a staggering 250% increase in less than a decade.
This isn't an outlier. In 2022 alone, house prices rose by 20%. And in Portugal's major cities, you need to earn around double the minimum wage just to be able to afford a one-bedroom apartment, which can cost up to 2,000.
There is a housing crisis, a cost of living crisis, and now even an immigration crisis, but not as you may think. In September 2024, the country saw one of the biggest protests in history. Thousands took to the streets to protest, but not against the government.
Their target was a modern phenomenon, tourists and wealthy foreigners. Last year, tourism employed one in every 10 people in Portugal, and so-called digital nomads have been bringing in billions of euros every year for the economy. But in the eyes of many Portuguese, the damage has already been done.
People are being pushed out of their homes and onto the street or becoming housekeepers in the homes they used to grow up in. The Portuguese have had enough. And to many, the causes are clear.
But in reality, these issues are just symptoms of a much bigger problem facing the nation. One which could come to define the country and even Europe for decades to come. This is how living in Portugal became impossible.
Portugal's recent crisis, despite its urgency, is a relatively new phenomenon. Even just a decade ago, many locals still saw it as an affordable place to live. But to understand how Portugal plunged into a crisis so quickly, we need to first go back in time.
In 1974, Portugal had just emerged from a dictatorship and was about to embark on a journey of transformation. While countries like Germany and France had spent decades building modern economies, Portugal was essentially starting from scratch. For the ordinary Portuguese, it meant earning less than $9 a day in today's money.
And while times were tough, the country began to rebound. Throughout the 1990s and early 2000s, the economy grew steadily as European funds poured in, financing new highways, bridges, and modernization projects. Portugal was transforming before everyone's eyes and becoming quite a nice place to live.
But beneath this veneer of progress, a key problem remained. Portugal was still struggling to develop competitive industries that could provide highpaying jobs. Things like manufacturing or high-skilled industries.
Instead, the country was increasingly shifting towards a service economy. And one sector in particular was growing faster than all the others, tourism. Throughout the 1990s, Portugal had been aggressively marketing itself as a tourist destination, putting places like the Algav or Lisbon and Porto front and center.
And by the early 2000s, this had become Portugal's fastest growing industry. Within half a decade, the country's income from tourism nearly doubled from 6 to 11 billion in 2000 to 2005. As tourism grew, so did construction.
New hotels, resorts, and vacation properties sprouted along the coastline. And on the surface, this was great. Money was pouring in, creating jobs across a load of new sectors and making those who are placed in the right industries really, really rich.
Portugal was becoming Europe's affordable paradise. But this growing dependence on tourism and foreign investment was slowly building a ticking time bomb, one which erupted in 2008. Before we dive further in, I want to say a big shout out to today's sponsors, Heroes of History.
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The global financial crisis hit Portugal like a brick wall. The country had never fully developed a robust industrial base and instead had become increasingly dependent on tourism and construction and now faced an economic collapse. By 2011, Portugal was forced to accept a€ 78 billion euro bailout from the IMF in the EU.
And with the construction industry collapsing and unemployment soaring, the government needed a quick solution. Amid all the turmoil, there was however one golden opportunity, one industry that could single-handedly pull Portugal back from the brink of disaster. Or so it seemed.
This is, of course, tourism. And the country once again went allin, except this time with a twist. In 2012, the government launched the now infamous golden visa scheme.
The idea was simple. offer residency to wealthy foreigners in exchange for investment in the country. Wealthy people would bring in a ton of money which would in turn create jobs and flow into the economy.
Portugal became a global hot spot for wealthy foreigners. With this one scheme alone generating over 7 billion, but beneath this success lay a mounting crisis. Houses were simply running out and the ones which were available were becoming even more expensive.
In the decade following the launch of the Golden Visa scheme, property prices in major cities have increased on average by more than 250%. All coming at a time when average incomes have remained stagnant. These visas allowed investors from outside of the EU to get a resident visa in Portugal and invest.
But instead of living there, often they would just redo a house and it would still be left empty. Many times those same properties would then be sold on time and time again creating a distortion on the housing market being one of the leading causes of the current crisis. Sellers also strategically priced properties to meet the Golden Visa investment threshold of €500,000 artificially increasing prices.
In fact, after the program's introduction, the number of transactions exactly at this mark increased by 60%. This has made it nearly impossible for many Portuguese citizens to afford a home. With that said, the crisis isn't all down to the government's visa scheme.
At the same time, Portugal's tourism industry was booming. From 2010 to 2024, the number of tourists coming into the country more than doubled. Despite only having a population of 10 million, in 2024, the country welcomed around 18 million tourists and accounted for nearly 20% of the country's GDP, which is almost 60 billion every single year.
For context, this rate is one of the highest in Europe. Neighboring France and Spain are both also tourism hubs, but this figure only makes up around 13% of their economy. While tourism has certainly had many negative effects, it did also revitalize entire regions.
After the financial crisis, many parts of the city were in economic freeall and streets and buildings were often derelictked. But with this boom in tourism, things changed as investors flooded in, restoring historic buildings and bringing lots of muchneeded money into many areas. For many, this was a lifeline.
It created hundreds of thousands of jobs and pumped money into local businesses, saving the economy from further disaster. But despite this, many people have now had enough, thinking it's simply gone too far. While tourism created jobs, they were predominantly in lowpaying and seasonal sectors.
The average tourism worker earns around €1,200 a month, which can be barely enough to cover rent in most major cities. In the Algav, Portugal's most tourism dependent region, many tourism workers cannot afford to live in the communities they serve, with some commuting for hours each way from inland areas where housing is still somewhat affordable. In reality, most of the benefits from tourism go to a select few, those that already have land, buildings, or means to take advantage of the boom.
It's therefore perhaps not surprising that Portugal has one of the highest levels of wealth inequality in the developed world, and this is what the tourism boom has been fueling. All of these tourists need somewhere to stay, and hotels, short-term rentals, and Airbnb properties have exploded in number, squeezing out long-term housing options for locals. Today, major cities in Portugal are dominated by tourist flats.
In 2020, they represented over 11% of the housing stock. And in areas like the historical neighborhood of Alama, now 60% of the houses are used for short-term rentals. Paired with the golden visa scheme, which brought in tens of thousands of wealthy foreigners, and it's easy to see why Portuguese citizens are now being priced out of their own homes.
In the last 4 years alone, in Lisbon, prices have surged by 57%. In Porto, a staggering 61% increase and in the Algav, up by 51%. But here's where things get interesting.
These price increases are not happening because there's not enough houses. In fact, Portugal has one of the highest rates of housing in Europe at 1. 4 dwellings per household.
When it comes to buying a house, it's not much easier either. And in cities like Lisbon, in 2023, onethird of all houses sold went to foreigners. And in 2024, a third of Lisbon's historical center was left unoccupied.
While it's not necessarily true to say that there are not enough houses, Portugal would certainly benefit from more construction. Unfortunately for them, it has one of the lowest building rates in Europe. at only 11 new homes per a thousand residents in the last decade.
Also paired with some of the most extensive and complicated systems of planning regulations in Europe with further environmental protections and ones on construction noise keeping this number even lower. When you combine these two elements, an explosion in demand and heavily restricted supply, you're practically guaranteed one thing, skyrocketing prices. In a country where 50% of people make under €1,000 a month, living in a major city has become totally unaffordable.
The country's monthly minimum wage is €840. But the average cost of a one-bedroom flat in a major city like Porto is 1,100. For most of the population, home ownership has now become a distant dream, and renting has become a financial nightmare.
That's why in 2022, over half of people aged 25 to 34 still lived with their parents. This wasn't just about comfort or independence. It's creating a demographic crisis.
Portugal's birth rate has plummeted to just 1. 3 children per women, one of the lowest in the world. The consequences from this are already visible.
Portugal's population has been shrinking since 2010 with more deaths than births per year. In rural areas, schools are closing and entire villages are being abandoned as young people flee to other EU countries in search of better opportunities. Massive waves of tourism have made living in the country totally unaffordable for the majority of citizens.
So, you might be wondering what the government is doing to curb this housing crisis, which in part they created. Well, unfortunately, not very much. In fact, in 2022, the government doubled down, launching a new digital nomad scheme.
This allows remote workers to live in Portugal while benefiting from tax breaks and a lower cost of living. But to qualify, workers must earn at least €2,800 per month, a healthy four times the country's minimum wage. In another effort to seemingly punish their citizens, this has created a massive influx of wealthy foreigners while simultaneously imposing measures that make it nearly impossible for locals to secure housing.
To make matters worse, houses aren't the only asset the country has been selling off to wealthy foreigners. Take Fidelade. Founded in 1808.
It's Portugal's oldest and largest insurance company, commanding over 30% of the market share. For generations, it was seen as a pillar of reliability. An institution deeply woven into Portugal's financial and economic fabric.
Yet, in 2014, something changed. The company was sold and not to a Portuguese buyer. Fosen International Limited, a Chinese conglomerate, acquired an 80% stake, effectively taking control, not just of the company's profits, but of its decision-making power as well.
This wasn't just another business deal. It was a clear sign of what was happening across the country. Portugal's most valuable assets were slipping into foreign hands.
And this was just the beginning. Energy of Portugal, the country's leading energy provider, was sold to Chinese buyers. And since then, energy prices have been hiked repeatedly, squeezing households already struggling with rising rents.
Motor Angel, a major construction and engineering firm, sold over 30% of its capital to China, handing over significant influence to foreign investors. The pattern is clear. Portugal is selling off its assets piece by piece.
But at what cost? These foreign acquisitions may seem like smart business moves, bringing immediate cash flows and generating quick profits for Portuguese sellers, but beneath the surface lies a dangerous tradeoff with farreaching consequences. When foreign corporations buy Portuguese assets, they create a one-way flow of wealth.
Profits that once circulated within Portugal's economy now flow outward to international shareholders and foreign headquarters. The money that could have been reinvested in local communities instead enriches multinational corporations thousands of miles away. More troubling still is the loss of control over essential industries.
As key sectors fall under foreign ownership, Portugal's government finds its hands increasingly tied, unable to effectively regulate or protect national interests. Strategic decisions about energy, insurance, and infrastructure are now being made in boardrooms in Beijing and New York rather than in Lisbon. This corporate sell-off couldn't have happened at a worse moment.
Today, Portugal stands at the precipice of a perfect storm. A country once celebrated as an affordable paradise is rapidly becoming unlivable for its own people. Housing costs have skyrocketed, wages remain stagnant, and the foreign investment that was supposed to be Portugal's salvation has instead become the force driving locals from their homes and communities.
The protests in Portugal are not just about housing. They're a warning sign of something much bigger. If these issues remain unressed, Portugal risks becoming a nation where the next generation has no future.
where young people either stay trapped in their parents' home or leave the country altogether. The question now is, will the government step in to fix these deeprooted issues or will Portugal continue down a path where its own citizens are pushed out in favor of foreign wealth?
