Phoenix 24
Lower borrowing costs revive demand across most markets.
Paris | July 2026
Europe’s residential property market regained momentum in 2025 as home sales increased in 17 of the 20 countries examined through Eurostat data. The recovery emerged despite continued price increases across much of the continent, showing that buyers gradually returned as borrowing conditions became more predictable and previously postponed transactions moved forward.
Euronews reported that annual changes ranged from a 4.1 percent decline in Croatia to a 29.9 percent increase in Slovenia. The wide variation reveals that Europe does not operate as a single housing market. Mortgage accessibility, household income, employment, consumer confidence, housing supply and domestic regulation continue to produce sharply different outcomes from one country to another.
Slovenia registered the strongest percentage increase, although its market remained the smallest among the countries with available transaction totals. Approximately 11,000 homes changed ownership during the year, meaning that a relatively limited rise in the number of transactions could produce a substantial percentage movement.
Lithuania followed with growth of 22.8 percent, while Austria recorded an increase of 21.4 percent and Belgium reached 20.2 percent. These figures placed all three markets above the 20 percent threshold and confirmed that the recovery was not restricted to a single European region.
Luxembourg recorded an annual increase of 18.6 percent, followed by Hungary at 17.3 percent. Sales also rose by 13.9 percent in the Netherlands, 12.7 percent in Denmark, 11.2 percent in France and 10.5 percent in Portugal.
Latvia, Finland and Norway reported increases close to 10 percent. Spain recorded growth of 5.4 percent within the comparable Eurostat series used in the analysis, extending a positive trend that had already been visible during the previous year.
France delivered one of the most significant reversals. Its market moved from contraction in 2024 to double-digit growth in 2025, suggesting that buyers who had delayed purchases during the period of rapidly increasing mortgage costs began returning once financing conditions stabilized.
More than one million homes were sold in France, the highest absolute total among the 14 countries for which transaction volumes were available. The French market expanded even though housing prices remained nearly unchanged between the first quarters of 2025 and 2026.
That combination distinguishes France from markets where rising transactions were accompanied by strong price inflation. Limited price growth may have improved buyer confidence and allowed demand to recover without immediately intensifying affordability pressures to the same extent observed elsewhere.
The Netherlands recorded approximately 265,000 housing transactions. Hungary, Belgium, Portugal and Norway each registered between 130,000 and 160,000 sales, demonstrating the difference between percentage expansion and the actual size of a national property market.
A small country can lead the annual growth ranking while completing relatively few transactions. Larger markets may produce lower percentage increases but generate far more activity for lenders, construction companies, real estate agencies and public revenue systems.
The recovery was closely associated with the stabilization of the Euribor and other benchmark interest rates. European households faced rapidly rising borrowing costs after central banks tightened monetary policy to control inflation, making mortgages more expensive and reducing the amount buyers could finance.
As interest rates became more predictable from late 2024 onward, households gained greater confidence in calculating monthly payments. Some buyers who had postponed decisions during the most uncertain period returned to the market, creating a release of accumulated demand.
Improved financing conditions did not resolve Europe’s underlying housing shortage. Construction costs remained elevated, while limited development activity restricted the supply of new homes in many cities and economically dynamic regions.
When demand returns faster than supply can expand, transaction growth may eventually place additional pressure on prices. The market recovery therefore carries a contradiction: more families are completing purchases, but increasing activity does not necessarily make housing more affordable.
Croatia presented the clearest exception to the broader trend. Home sales declined by 4.1 percent in 2025, marking a fourth consecutive annual fall. Bulgaria recorded a smaller reduction of 2.5 percent, while sales in Poland decreased by 1.1 percent.
Croatia’s continued decline occurred despite rapidly rising housing costs. Property prices increased by 14.3 percent between the first quarters of 2025 and 2026, while rents climbed by 39.1 percent, the strongest increase registered across Europe during that period.
The combination of higher prices, surging rents and falling sales suggests that domestic affordability constraints and tourism-related demand may be reshaping the market. Properties can become more valuable without generating more transactions when local households cannot afford to buy or owners prefer income from short-term and long-term rentals.
Croatia was also the only country in the comparison to record declining sales in both 2024 and 2025. Its experience demonstrates that lower financing costs alone cannot overcome limited supply, elevated prices and market structures shaped by investment and tourism.
Across the wider European sample, however, the number of countries reporting falling sales dropped from six in 2024 to three in 2025. That shift supports the conclusion that residential activity entered a broad recovery rather than experiencing isolated improvement in a few national markets.
Housing remains the principal source of household wealth across the eurozone. For owner-occupiers, a home provides stability and long-term financial security. For investors, it can produce rental income and capital appreciation, creating competition between residential needs and asset-based demand.
The return of buyers may support construction, banking and consumer spending because property transactions often generate additional purchases involving renovations, furniture, insurance and professional services. Yet it may also deepen inequality when existing owners benefit from rising values while first-time buyers struggle with deposits and monthly payments.
Europe’s renewed housing activity therefore cannot be interpreted solely as a sign of economic strength. Greater transaction volume shows that confidence and credit conditions have improved, but persistent supply restrictions continue to limit access.
The decisive question is whether policymakers can encourage construction and expand affordable housing before returning demand creates another cycle of rapidly escalating prices.
Phoenix24 | Recovery opens markets, but supply determines access. La recuperación abre mercados, pero la oferta determina el acceso.