Lisbon's Living Costs Higher Than Wages

Lisbon’s cost of living in 2025 has risen above the average salary, leaving many residents struggling to cover basic expenses.

At a Glance

• Monthly basic expenses for a single person in Lisbon: approximately €1,364

• Average monthly salary: around €1,223

• Deficit: Lisbon residents find that their basic needs cost €141 more than they earn.

This disparity makes it difficult to manage day-to-day essentials without dipping into savings or generating extra income.

How Lisbon Compares to Other Capitals

Lisbon joins the ranks of European capitals where average incomes fail to cover living costs. Peer cities include:

• Warsaw (Poland)

• Tirana (Albania)

• Athens (Greece)

• Chisinau (Moldova)

On the other hand, capitals in countries like Switzerland, Luxembourg, Finland, Norway, and Denmark fare much better.

For instance, in Luxembourg, basic expenses represent less than one-third of a family's income, and in Bern, they’re about 34%, leaving substantial surplus funds

Broader Economic Context: Wages, Inflation & Minimum Pay

Average Net Salary Growth

• By mid-2025, the average net salary in Portugal rose to €1,264, a 7.3% increase from the previous year, translating to a €86 boost in nominal terms. Adjusted for a 2.4% inflation, real growth was closer to €84, reaching €1,262.

Minimum Wage Shortfall

• The minimum wage in Portugal is €870 per month (as of 2025).

• Basic living costs, including rent, total around €1,620, yielding a monthly deficit of €717.

Impacts on Locals & the Economy

Two or Three Jobs Just to Stay Afloat

Due to insufficient wages and rising costs, it's increasingly common for Portuguese workers to hold multiple jobs. In 2023, over 250,000 working-age individuals worked two or three jobs to make ends meet. Additionally, 75% of Portuguese families reported difficulty in paying bills due to rising housing, food, and utility costs.

Rising Housing Crisis Amid Nomad Influx

Gentrification and soaring housing prices, spurred by digital nomads and foreign investment, are exacerbating Lisbon’s affordability issues. One journalist described Lisbon as Europe's most unaffordable capital for housing, citing property-price-to-salary ratios of 21:1 in some areas. This housing strain is pushing locals out and fueling socio-economic tensions.

Final Takeaway

Lisbon is facing an affordability crossroads. With living costs outpacing wages, many residents are forced to compromise quality of life, juggling jobs, leaving the city, or drawing from savings. Without policy intervention and wage reform, this imbalance may grow even starker. Lisbon’s story is a cautionary tale, one that other European capitals may soon echo unless action is taken.