Europe’s housing market rebounded broadly in 2025, with 17 of 20 countries reporting higher home sales compared to the previous year. Lower borrowing costs, stabilising interest rates, and pent-up demand from the high-rate period of 2023–2024 drove the recovery, even as property prices continued to climb in most markets.
According to Eurostat data, annual changes in transactions ranged from a 4.1% drop in Croatia to a 29.9% surge in Slovenia. Lithuania (22.8%), Austria (21.4%), and Belgium (20.2%) also recorded growth above 20%. Double-digit increases were seen in Luxembourg (18.6%), Hungary (17.3%), the Netherlands (13.9%), Denmark (12.7%), France (11.2%), and Portugal (10.5%). Latvia (9.2%), Finland (9%), and Norway (8.3%) posted gains close to 10%.
Among Europe’s largest economies, data was available only for Spain and France. Spanish home sales rose by 5.4%, while France recorded a notable turnaround: after a decline in 2024, transactions grew by 11.2% in 2025, exceeding one million sales. French house prices, however, rose by just 0.1% year-on-year in the first quarter of 2026, suggesting that volume growth was not accompanied by strong price inflation.
Smaller markets lead percentage gains
Slovenia posted the highest percentage increase, though its absolute number of transactions was the lowest among reporting countries at 11,000. Mikk Kalmet, real estate advisor at Global Property Guide, noted that percentage changes can appear larger in smaller markets, but the breadth of the recovery was significant. “This points to a broad recovery in market activity, likely reflecting improved financing conditions and the release of demand postponed during the period of higher interest rates,” he said.
In the Netherlands, 265,000 homes changed hands. Hungary, Belgium, Portugal, and Norway each recorded between 130,000 and 160,000 sales. Kalmet emphasised that the market began to recover as Euribor and other bank interest rates stabilised, giving buyers greater predictability from late 2024 onwards.
Real estate remains the main source of household wealth in the eurozone, according to the European Central Bank. While most buyers purchase a home to live in, others treat property as an investment. The recovery in 2025 was broad-based, but domestic factors continued to shape outcomes in individual countries.
Croatia: a persistent outlier
Croatia was the only country where home sales declined for the fourth consecutive year, falling 4.1% in 2025. This occurred despite the country’s popularity as a tourist and holiday destination, where house prices rose by 14.3% between the first quarters of 2025 and 2026 — the fourth-highest increase in Europe. Croatia also recorded the strongest rent growth in Europe, at 39.1% over the same period. “Croatia was the only country to record declines in both years, highlighting that domestic factors continued to shape housing market performance despite the broader European recovery,” Kalmet said.
Bulgaria and Poland also saw slight declines, of 2.5% and 1.1% respectively. In 2024, home sales had fallen in six countries; by 2025, that number dropped to three.
High construction costs and limited new supply remain constraints across many markets. Kalmet noted that mortgage affordability, household incomes, employment, consumer confidence, and housing supply are the key drivers of residential property transactions. The stabilisation of interest rates has helped, but affordability pressures persist in several countries, particularly where prices continue to rise faster than wages. For context, real wages remain below 2021 levels in one-third of European countries, which may temper future demand.
The recovery in home sales is a positive sign for the broader European economy, as housing activity supports construction, renovation, and related services. However, the divergence between markets — from Slovenia’s boom to Croatia’s persistent slump — underscores that local conditions, including supply constraints and regulatory frameworks, play a decisive role. As the European Central Bank continues to calibrate monetary policy, the housing market’s trajectory in 2026 will depend on whether borrowing costs remain favourable and whether supply-side bottlenecks ease.
