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 Lisbon cost of living 2022?
Whether it’s buying a property in Portugal, eating out in restaurants, or daily living costs, the relatively cheap prices 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: Is it an affordable city?
Compared to many other countries in Europe, Portugal is a very affordable country to live in. Most things, from securing an apartment to eating in your local restaurant, are significantly cheaper when compared to other Western European countries. However, factor this against the salaries and the minimum wage, 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? 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. Yes, one thing that cannot be stated enough is that the 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 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.
Our partner, Global Citizen Solutions, a boutique residency and citizenship by investment consultancy, focused on finding the perfect investment, citizenship, or residency program for individuals across the world, has recently developed a new passport ranking. They take into account not only visa-free access to other countries but also investment opportunities and quality of life. In their Quality of Life Index, Portugal ranks in 12th position. This takes into account the cost of living, alongside levels of freedom, happiness, environmental performance, sustainable development, and migrant acceptance. This highlights that, as countries go, Portugal is one of the best countries to live in for those looking for a high quality of life in an affordable country.
Cost of living in Lisbon: Property
There are many beautiful neighborhoods in Lisbon, each with its own unique characteristics. Whether you are looking to live in the city center or in the surrounding area, you will find excellent properties to rent or buy. Note that property in the city center will be more expensive and, as you move further away from the city center, prices will decrease.
Knowing whether to pay rent or buy a property can be difficult. If you consider a longer time scale, then purchasing property in Lisbon is better, as you can receive a steady flow of income if you decide to rent out the property in the future, or sell for a profit, as property prices continue to increase. However, we know that buying a property is a major investment, and renting may be better suited to your short-term or current needs.
You’ll be able to find a range of property types, from modern apartments with air conditioning, to villas in the surrounding area. It will depend fully on what you are looking for.
In this part of our cost of living in Lisbon article, we’ll provide you with some insights into renting or buying property. Note that if you buy or rent in the city center, or in-demand neighborhoods, then the prices will inevitably be higher than in more affordable parts of the city.
Buying a property in Portugal
Property in Portugal is generally more affordable than in other countries in western Europe. However, for the Lisbon real estate market, prices have been increasing over the past years and you will need to take into account the housing costs.
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. Note that the purchase price can be higher or lower than the asking price, so keep this in mind when negotiating with the seller.
As you can see, in the capital itself, housing prices are much steeper than in the surrounding area.
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.
Our Expert Guide to Buying Lisbon Real Estate should be able to provide you with all you need to know about buying property in the Portuguese capital. Note that the first step is to obtain a Portuguese Tax Number (NIF) and open a Portuguese bank account, to avoid transaction fees. There are many banks where you can open a bank account in Portugal, and you can even open one online. Some of the banks include Millennium BCP, Novo Banco, Banco BPI, and Banco Santander Totta.
Alongside this, our new e-book, Your Expert Guide to Buying Property in Portugal, will arm you with an easy six-step guide to the buying process, the best options to open bank accounts, where the best places to buy in the country are, plus key information on taxes, fees, and financing your property.
Renting a property in Portugal
The Lisbon real estate market is still affordable when compared to other cities in Europe although the city is steadily becoming more expensive. To give you an indication of renting a one-bedroom apartment, average rent prices in Lisbon for a one-bedroom apartment will cost you around €650-670/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) provides certain tax benefits. The Portuguese government introduced this scheme in 2009 and it 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 living for retirees will also not set you back much, and you should be able to live a very high quality of life in the city. As mentioned, from grocery shopping to public transport, Portugal is an affordable country to live in.
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. The monthly fee is also dependent on your provider. For two people, in an 85m² apartment, the estimated monthly costs are around €120 and €130. For some apartments for rent, there will be no additional cost as this will be included in the rental price. Be sure to check if your bills are included or not in the rental price. For mobile phones, 1 minute of a prepaid mobile tariff local, without any discount or plan, will cost you €0.15. You should be able to find some good deals for a prepaid mobile tariff, so it can also be cheaper than this.
Cost of living in Lisbon: Other costs to consider
You’ll find a range of restaurants in Lisbon, from extremely affordable eateries to a mid range restaurant, to luxury postcodes. Walking around Portugal’s capital, you’ll be pleased to see many a tasca (traditional, local inexpensive restaurant) where you can happily eat very good quality food for between €7.50-€10, often with a café and sobremesa (desert) included. This is often typical traditional fare that is very well cooked in family-run restaurants. The price of domestic 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. A mid range restaurant will be a little more expensive, and you also find a wide range of cuisines to sample in Lisbon.
Indeed, the restaurant sector is one that has expanded considerably over the years, with cuisines from across the world and many vegetarian and vegan options. Do not worry, for those that eat meat, Portugal is one of the best places to find top-quality meat, cooked incredibly well.
For something a bit more special, a meal in a mid range restaurant will cost you around €45 for a three-course meal, and for luxury restaurants, you can expect to pay international prices.