Across Europe, housing has become one of the defining social and economic challenges of our time. Nowhere is this pressure more visible than in Portugal. While housing prices across the EU have risen by roughly 50% over the past decade, in Portugal they have surged by an astonishing 200%, according to the European Commission’s 2025 report on housing market developments. Today, Portugal stands as the most overvalued housing market in the European Union (with average home prices estimated at 35 % above fair value) the only Member State where overvaluation continues to rise.

Behind these figures lies a complex interplay of economic and structural factors. High interest rates have made it increasingly difficult to finance new developments, slowing the flow of capital into housing infrastructure. Simultaneously, the permitting process remains among the lengthiest in Europe (averaging more than 31 weeks) creating uncertainty and delays for investors and developers (Euronews, 2025).

Further compounding the challenge is the expansion of short-term rentals, which has absorbed a substantial share of housing stock to serve tourists and digital nomads rather than residents. At the same time, thousands of vacant buildings remain under-utilised, despite their potential to be converted into affordable student dwellings, an issue highlighted directly by the Commission’s analysis of unoccupied stock across southern Europe. Combined with limited available urban land, these constraints have created a severe supply bottleneck.

For students, these systemic barriers translate into a daily struggle for access. Portugal’s universities are welcoming a record number of international learners through Erasmus+ and the European Education Area, yet housing availability has not evolved at the same pace. The European Commission’s 2025 housing report highlights that it takes an average of 31 weeks to obtain a building permit in Portugal (one of the longest approval timelines in the EU) slowing delivery just as demand intensifies (Euronews, 2025). Meanwhile, Cushman & Wakefield’s 2024 PBSA Portugal Market Report shows that Lisbon and Porto remain among Europe’s most undersupplied cities for purpose-built student accommodation, with provision rates of only 3–6 percent and rents rising by nearly 8 percent year-on-year. As a result, many students are being pushed further from campuses, competing with local families and workers for increasingly scarce and expensive homes.

And yet, Portugal’s story is not one of crisis alone, it is also one of opportunity. The fundamentals of the market remain strong. Institutional investors, including pension and insurance funds, continue to view Portugal as a promising long-term market. What is needed now is a clearer framework for investment: one that combines policy certainty, fiscal incentives, and streamlined approval procedures. Encouragingly, the government’s recent reduction of VAT to 6% on affordable housing projects up to €648 000, and on rental units below €2 300 per month, represents a step in the right direction (Euronews, 2025).

Such measures can help unlock stalled projects, mobilise private capital, and, most importantly, expand access to affordable homes for students. At The Class Foundation, we believe student housing is not merely a real-estate asset but a cornerstone of Europe’s talent infrastructure, enabling access to higher education, fostering inclusion, and strengthening the innovation ecosystems that drive Europe forward.

That’s why, on November 5–6, we are convening policymakers, investors, universities, and city leaders in Lisbon for The Class Conference 2025—Europe’s leading ecosystem on student living. Together, we will explore how Portugal can accelerate delivery, attract responsible investment, and ensure that every student has a place to call home.

Join us in Lisbon as we work to reinforce Europe’s position as the leading study destination, starting right here in Portugal.

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