European urban centers are experiencing a significant and accelerating escalation in rental costs, a trend meticulously detailed in a recent Deutsche Bank analysis. This comprehensive review surveyed 67 cities worldwide, including 28 across Europe, revealing stark divergences in affordability across the continent alongside dramatic increases over the past five years, particularly pronounced in Southern and Eastern European markets.
- A Deutsche Bank analysis, surveying 67 cities globally, highlights intense rental cost escalation in European urban centers.
- Between 2020 and 2025, Eurostat data shows average EU house prices surged by 27.3% and rents by 12.5%, though central urban rents significantly outpaced these averages.
- As of 2025, London stands as Europe’s most expensive city for a three-bedroom apartment at €5,088, while Athens is the most affordable at €1,080.
- Istanbul recorded the most dramatic rent increase in Europe between 2020 and 2025, soaring by 206% for a three-bedroom apartment and 191% for a one-bedroom unit.
- Southern and Eastern European cities, including Lisbon, Prague, and cities in Spain, generally experienced the sharpest rental price escalations over the last five years.
European Rent Dynamics: A Tiered Landscape
As of 2025, monthly rents for a three-bedroom apartment in European city centers demonstrate a wide spectrum, from Athens at €1,080 to London, which stands as the continent’s most expensive at €5,088 (£4,278).
The highest tier, with rents exceeding €3,000, is dominated by financial and international hubs. Beyond London, Swiss cities Zurich and Geneva, along with Amsterdam, command prices above €3,800, with Swiss locations generally exceeding €4,250. Dublin, Luxembourg, Paris, Copenhagen, and Munich also fall into this high-cost category, reflecting strong demand driven by their economic significance and high living standards.
A substantial mid-range exists for well-developed cities, where rents for a three-bedroom unit typically fall between €2,000 and €3,000. Milan, Edinburgh, and Lisbon are positioned at the higher end of this range. Madrid, Stockholm, Berlin, Frankfurt, and Barcelona are slightly more accessible, averaging around €2,500. Cities like Birmingham, Brussels, Vienna, and Prague offer more moderate costs, closer to €2,100.
Only a select few European cities offer average rents below €2,000. These include Athens (€1,080), Budapest (€1,225), Istanbul (€1,614), Warsaw (€1,881), and Helsinki (€1,928). This geographic distribution underscores that Western and Northern European cities, buoyed by robust economies and persistent housing shortages, generally face the highest rental costs, while Eastern and Southeastern Europe remain comparatively more affordable.
In a global context, New York emerges as an outlier with an average monthly rent of €7,676 ($8,388), contrasting sharply with Cairo, which is the cheapest at €377. Dubai and Sydney also present high average rents, often exceeding €4,000, placing them among the world’s most expensive cities. Other global centers like Toronto, Seoul, Tokyo, Moscow, and Shanghai typically feature mid-range rents around €2,500.
Trends in Rental Price Increases (2020-2025)
Between 2020 and 2025, European city centers experienced significant disparities in rent increases for three-bedroom apartments. Increases ranged from a modest 3% in Helsinki to an astonishing 206% in Istanbul. Notably, Southern and Eastern Europe generally witnessed the sharpest escalations. Following Istanbul, Lisbon (81%), Prague (73%), and Edinburgh (71%) all saw rises exceeding 70%. Spanish cities also recorded substantial increases, with Barcelona experiencing a 65% surge and Madrid a 59% rise. Athens and Warsaw likewise saw increases just over 50%.
The dynamics of rent increases varied by apartment size across different cities. For one-bedroom units, Istanbul (191%) and Helsinki (18%) again represented the extremes, though Helsinki’s one-bedroom increase was notably higher than its three-bedroom equivalent. Some cities, such as Istanbul (15 percentage points more), Prague (23 pp), and Amsterdam (10 pp), recorded higher increases for three-bedroom apartments. Conversely, Milan (20 pp) and Warsaw (10 pp) saw greater surges for one-bedroom flats.
Ultimately, a comprehensive understanding of rental affordability necessitates a critical evaluation of local income levels against housing costs. Significant disparities can exist even within a single country, as exemplified by London’s housing costs being approximately 50% higher than the UK average, emphasizing the crucial interplay between economic conditions and urban living expenses.
Sophia Patel brings deep expertise in portfolio management and risk assessment. With a Master’s in Finance, she writes practical guides and in-depth analyses to help investors build and protect their wealth.