The European housing market continues its upward trajectory, demonstrating sustained nominal price increases across the majority of member states in the second quarter of 2025. This marks the seventh consecutive year of year-over-year growth, underscoring a persistent demand that has, in many regions, outpaced concerns about housing affordability. While nominal gains were registered in nearly all EU countries, with the exception of Finland, a more nuanced view emerges when adjusting for inflation, revealing that 21 out of 26 nations experienced real price appreciation.
Several countries have witnessed substantial nominal price escalations over the past year. Portugal led the surge with a 17.1% increase, followed closely by Bulgaria at 15.5% and Hungary at 15.1%. Croatia, Spain, Slovakia, and the Czech Republic also recorded double-digit nominal growth, exceeding 10%. In contrast, Finland was the sole country to experience a nominal price decline, down 1.3%. Modest increases were observed in France (0.5%), Sweden (0.7%), and Cyprus (1%), while major economies like Germany and Italy saw more moderate growth of 3.2% and 3.9% respectively. Turkey, though recent data is still pending, reported a significant 28.5% nominal increase in prices by the fourth quarter of 2024.
When accounting for consumer price inflation, the picture of real price changes provides a more accurate reflection of market dynamics. Across the EU, real house prices appreciated by an average of 2.8%. Portugal and Bulgaria stood out with the strongest real price growth, both surpassing 14%. Hungary and Spain registered notable increases of 9.2% each, with Croatia close behind at 8.9%. These robust real gains in Portugal are attributed to a confluence of factors, including heightened foreign demand from expatriates and digital nomads, bolstered by favorable tax incentives and residency programs, all set against a backdrop of persistent housing supply shortages, particularly in sought-after urban and coastal areas.
In Bulgaria, real price increases are linked to broader economic growth, improved access to mortgages, and a general sense of optimism surrounding its Eurozone accession. Conversely, five EU countries saw real price declines, though these were generally modest. Finland experienced the most significant real decrease at 2.6%, followed by Sweden at 1.7% and Romania at 1.2%. Minimal contractions were noted in France (0.1%) and Austria (0.3%). Real price increases in Italy (1.8%) and Germany (0.7%) remained below the EU average.
Examining the longer-term trend over the five years leading up to the second quarter of 2025 reveals significant shifts in real estate values. Portugal again led with a remarkable 40.6% increase in real house prices, significantly outpacing other nations. This sustained growth is partly attributed to the ongoing impact of remote work trends, enabling individuals and entrepreneurs to relocate, coupled with the continued appeal of Portugal’s Non-Habitual Resident tax regime. Croatia, Hungary, Lithuania, Bulgaria, Estonia, and Slovenia also demonstrated strong real growth, exceeding 20%.
Finland’s real estate market, however, has experienced a substantial downturn over this five-year period, with prices falling by 18%. This decline is attributed to weak economic performance, rising unemployment, and a significant increase in interest rates since 2022, which has severely impacted affordability and stifled demand. Coupled with a large inventory of unsold new homes, particularly in the Greater Helsinki area, this has placed downward pressure on prices. Among the EU’s largest economies, only Spain saw real price increases (+14%), while Germany (-8.5%), France (-6.1%), and Italy (-3%) experienced declines. Spain, Croatia, and Greece have benefited from international buyers, tourism-driven demand, and relative affordability compared to other European regions, although rising borrowing costs are beginning to temper price growth in certain cities. Over the last five years, Turkey’s nominal house prices saw an extraordinary surge of 1,175%, far exceeding inflation.
Michael Zhang is a seasoned finance journalist with a background in macroeconomic analysis and stock market reporting. He breaks down economic data into easy-to-understand insights that help you navigate today’s financial landscape.