What Is the Cost of Living in Lisbon?
With beautiful beaches, excellent gastronomy, and welcoming people, Portugal seems to have it all. Indeed, Portugal is one of the most affordable countries in Europe to live in. However, with prices creeping up in the capital, not least due to flourishing startups and tech hubs, what is the cost of living in Lisbon?
Whether it’s buying a property in Portugal, eating out in restaurants, or daily living costs, the relatively cheap costs make the country an attractive point on the map. Whether you have decided on moving to Portugal or are still exploring your options, in this article, we’ll dip into the cost of living in the sunny capital, providing you with all that you will need to know before setting up shop here.
What is the cost of living in Lisbon – an affordable city?
Compared to many other European countries, Portugal is a very affordable city to live in. Most things, from securing an apartment through to eating in your local restaurant, are significantly cheaper. However, factor this against the salaries, which are also considerably lower than in many other countries.
The cost of living, as in any country, is dependent on your income, financial situation and spending habits. Do you want to frequent that luxurious rooftop with your favorite cocktail? Are you happy to eat at home most nights? Or do you want to enjoy the culinary delights of the country? These are the things that you should consider when looking at the cost of living in the city. Note that costs of living will vary depending on your lifestyle.
It is important to note that the cost of living in Lisbon, from property to restaurants, is more expensive in the capital than in other areas in the country. In the interior, particularly in the parts of the country that do not have high numbers of expats, prices can be very cheap indeed. Even Porto, the second-largest city in the country, is notably more affordable than its southern counterpart.
Cost of living in Lisbon: Property
Buying a property in Portugal
Property in Portugal is generally more affordable than in other European countries. However, for the Lisbon real estate market, prices have been increasing over the past years. Indeed, there is a different price range here from the rest of the country. Nonetheless, as a result of the COVID-19 pandemic, property prices flattened out. If you are looking to make a purchase, now could provide you with a window of opportunity to snap up a bargain at a better price.
In Lisbon city, the average asking house price stood at €5139/m2 in 2020. If you look at Greater Lisbon, this is reduced to €3225/m2. As you can see, in the capital itself, house prices are much steeper than in the surrounding area. Note that this is the average asking price. Therefore, it’s worth bearing in mind that the actual transaction cost can be significantly lower or higher than this.
A little-known secret about buying real estate in Portugal is to time your search well. In the summer months, you will be able to snap up a cheaper buy in Portugal than in other parts of the year. This is because only 5% of properties are sold between May and August, and the bulk of sales (65%) occur between September-to-December. Given that there are fewer buyers, this means that there is less competition for properties.
Renting a property in Portugal
The Lisbon real estate market is still affordable when compared to other European cities although the city is steadily becoming more expensive. To give you an indication of renting a one-bedroom apartment in Lisbon, this will cost you around €670/month.
Cost of living in Lisbon: Taxes and bills
If you are a tax resident in Portugal, your worldwide income will be subject to taxation at progressive rates from 14.5% to 28% for 2021. Non-residents are taxed only on Portuguese-source income at a flat rate of 25% on their tax remuneration in 2021.
As an expat moving to Portugal, the non-habitual residence scheme (NHR) allows you certain tax benefits. The Portuguese government introduced this scheme in 2009 and is applicable to anybody that has not been a resident in the previous five years. For the first ten years of your residency in the country, you will have beneficial tax treatment. If structured correctly, you can have significant tax exemptions and reduced tax rates.
You can easily see the attraction for retirees, as they may want to live off their pensions and investment dividends. They may be able to significantly optimize their tax affairs for ten years.
The cost of electricity, gas, and water will depend on the size of the property and how many people are living there. To provide an indication of the costs, a 45m² studio can cost between €80 and €90 per month. For two people, in an 85m² apartment, this can cost between €120 and €130.
Cost of living in Lisbon: Other costs to consider
Walking around Lisbon, you’ll be pleased to see many tascas (traditional, local restaurants) where you can happily eat very good quality food for €7.50, often with a café and sobremesa (desert) included. This is often typical traditional fare that is very well cooked from family-run restaurants. The price of beer and wine in restaurants is generally very cheap, with workers finishing the day with a €1 euro imperial (small beer) and some traditional tapas.
Childcare and schooling
Public schools are free in Portugal, but remember that the lessons will be taught in Portuguese. If your children are young, they will pick up the language quickly and should even give you a run for your money.
There are many very good quality English-speaking international schools available in Lisbon. For international schools, expect to pay around €7000 per year.
Portugal has very good quality healthcare which is relatively cheap. The country has a very good tax-funded public National Health Service (Serviço Nacional de Saúde) (SNS).
Under this, most essential medical services are free. You will be required to pay additional fees for non-essential services and treatments. Prices will vary depending on the service. For example, a consultation will cost less than Accident & Emergency and X-Rays will require you to pay an additional fee.
There is also private healthcare, which has become more popular. The cost of private healthcare will depend on the consultation and treatment.
Dental treatment does not usually fall under the National Health Service for most residents. You will probably have to pay out of your own pocket unless you have private dental insurance. Elderly people and children may receive free treatment.
Dental treatment is not as expensive as in other countries. While a filling in the USA can cost you €160 euros and €100 in the UK, in Portugal this would be €75.
There is a relaxed vibe to Portugal. The time set aside to appreciate a café or enjoy a nice lunch with a glass of wine is almost sacred. Indeed, there is a saying in Portugal that locals never hurry unless they are behind the wheel of a car. Then, you may see a different side to the relaxed, slow-living pace of your Portuguese friend.
When it comes to cars, petrol is marginally more expensive than some other countries, at €1.5 per liter. Cars themselves can be expensive to buy in Portugal, but the price drops down steeply for used cars, so you may be able to find a bargain.
In Portugal, public transport is relatively cheap and pretty well connected. It is possible to travel from Lisbon to Porto for just over €30. For travel around the Lisbon Metropolitan area, you can get a monthly pass for €40 euros. For travel just for the city, the ticket is reduced to €30. You also have discounts for over 65’s and children under 12 travel free. A family pass is also available, which costs €80 for the Lisbon Metropolitan and €60 for Lisbon city. For an individual trip, this will cost you €1.50. With “zapping” you can quickly and easily top up your Viva Viagem card to get around the city.
Generally speaking, household essentials are very affordable, particularly if you shop for local produce grown in Portugal.
What’s more, the produce in Portugal is incredible, much of which is grown in the green hills of the Alentejo region, where the constant sunshine makes for delicious fruits and vegetables, in addition to the famous Porco Preto, only reared in the region. Also, it will be no surprise to you because of the long coastline, that the fish and seafood available is both cheap and extremely good.
When it comes to wine – and Portuguese wines are some of the best in the world – you can find extremely high-quality wines for as little as €3 euros (unheard of in many other countries).
Cost of living in Lisbon: The luxury life
Don’t be fooled to think that Lisbon is simply about good quality, cheap food. Lisbon also has some internationally recognized restaurants, including Michelin-starred eateries and rooftop bars. With exceptional views of the Tejo, these exclusive areas have their own price ranges. Those opting for a more luxurious quality of living can expect to pay international prices. You will certainly not be disappointed in terms of both the quality and ambiance of the many exclusive locations.
If you are looking for higher priced properties and extra facilities, such as a pool or a gym, then the costs will be much higher. However, when compared to other European countries, the costs will still be more affordable.
On a final note, if you are considering buying in Lisbon, check out our expert guide to buying Lisbon real estate here.