Funchal Households Spend 89% of Income on Rent

Housing Effort Rate (Rent) in Funchal Now Takes Up 89% of Income

Families in Funchal continue to face extreme housing pressure. According to Idealista, renting a home in Madeira’s capital now costs 89% of a household’s income - the second-highest rate in Portugal after Faro (90%). The national average for rent effort rose to 83%, up one point from last year.

A Healthy Housing Effort Rate Should Not Exceed 33%

Experts recommend that rent not exceed 33% of income. Yet all 20 Portuguese cities studied remain above this level. In contrast, cities like Castelo Branco, Guarda, and Beja recorded the lowest rent burdens, around 34–35%.

Buying a Home Is Still Unaffordable in Funchal

Funchal also ranks among the least affordable cities to buy a home. Though the buying effort rate dropped from 110% to 96% over the past year, it remains well above the safe limit. This drop is partly due to falling interest rates, which offset the 8% rise in house prices. Still, Funchal is one of the top three most expensive cities to buy, alongside Lisbon (108%) and Faro (96%).

Only Six Cities Stay Below the Safe Limit for Buyers

Only six cities - Vila Real, Beja, Portalegre, Bragança, Guarda, and Castelo Branco - allow home purchases with less than 33% of income. These cities offer some financial relief, with effort rates between 17% and 27%. In all other cities, families must spend a much larger portion of their income to buy, keeping homeownership out of reach for many.

Method: How Housing Pressure Was Measured

The study by Idealista compares the net monthly income of an average household with the cost of renting or buying a home in 20 Portuguese cities.

For rent effort rate, the study calculates what percentage of a household’s income is needed to pay the average monthly rent. Income figures come from the National Statistics Institute (INE), and rent prices are based on listings published on Idealista.

For purchase effort rate, the study estimates how much of the same income would go toward monthly mortgage payments. These payments are based on average home prices in each city, a typical loan length (usually 30 years), and current interest rates provided by the European Central Bank (ECB).

Source: Idealista