In 2025, Europe’s real estate market shows signs of cautious recovery after a period characterized by economic uncertainty and increasing costs. While moderate growth is expected, financial and supply issues continue to weigh in the sector, especially in housing in large cities.
Following the fall of the second and third quarters of 2023, housing prices in the European Union reiterated their upward trajectory in 2024. The fall in 2023 was mild to nominal terms, but more intense when adapted to inflation and in relation to the household. By the end of the year, the nominal prices had been widely recovered, setting the stage for a more intense increase in 2024.
According to data analyzed by NegotiationBy the fourth quarter of 2024, the nominal prices of the EU houses were 4.9% higher than the previous year, surpassing their top in the mid -2022. The volumes of transactions were also recovered during this period, returning to levels comparable to those observed before the pandemic.
However, the scale of recovery varies significantly between Member States. Bulgaria, Hungary, Portugal, Spain, the Netherlands, Poland and Croatia recorded an annual increase in prices over 10% in the last quarter of 2024. Meanwhile, France and Finland have continued to move on an annual basis.
Source: European Commission
Lightly immersing EU housing prices in 2023 is mainly due to a sharp decline in household lending, which resulted from sharp increases in mortgage loans that exceeded income profits. However, as the percentages began to facilitate 2024, lending power recovered faster than housing prices-a displacement by the European Commission, although financial accessibility remains well above the long-term average. Much of the EU, the actual increase in home prices has surpassed lending improvements over the last five years, making it more difficult for households to qualify or provide mortgages.
Source: European Commission
Affiliate concerns are not limited to access to mortgages. The European Parliament highlights the wider cost pressures: between 2015 and 2023, EU housing prices increased on average 48% and only in 2023, 10.6% of urban households and 7% of agricultural households spent more than 40% of their useful income. These elements underline a significant pressure on household budgets, even when borrowing conditions improve.
Source: European parliament
The synthesis of these economic accessories is to deepen the structural housing reception. CBRE estimates that Europe’s lack of housing has now reached about 9.6 million homes – about 3.5% of the existing residential reserve – and warns that current levels of license and construction are inadequate to meet demand, operating at about 64% of what needed. Without a steady increase in building activity, it can only take four years to close this gap. In addition, CBRE projects increasing rental costs and increased privatization of housing will further aggravate the challenges of affordable energy for tenants in 2025, adding pressure to policy makers to intervene despite the risk that rental controls could may.
Source: Assets
Looking forward, household incomes are expected to increase – a key driver behind the lending capacity, backed by expected real wage increases by 1.6% in 2025 and 1.1% in 2026. However, the actual delivery of new houses will be delayed. Increased cost of construction, close funding conditions, land use regulations and environmental restrictions will continue to hinder the increase in supply, which means that economic pressure and supply deficiencies are unlikely to be facilitated in the near future.
Source: European Commission