House prices and rents continued to rise across the EU in early 2026, with households spending almost one-fifth of their disposable income on housing in 2025. This trend has sparked curiosity and concern, prompting a deeper analysis of the factors driving these increases and their implications for the region's housing market.
In the first quarter of 2026, house prices in the EU rose by 5.1% and rents increased by 3.0% compared to the previous year. Both figures outpaced the EU inflation rate of 2.3%, indicating a significant upward pressure on housing costs. However, the pace of growth varied widely across Europe, according to Eurostat.
Among the 28 European countries with available data, house prices rose in all but Finland, where they fell by 2% between the first quarters of 2025 and 2026. Portugal saw the highest increase at 17.8%, followed closely by Bulgaria (14.8%), Slovakia (14.4%), and Croatia (14.3%). These countries have experienced a surge in demand, driven by factors such as strong economic growth, population expansion, and the appeal of their real estate markets.
Among the EU's largest economies, Spain saw the highest increase at 12.8%, ranking fifth overall. In France, house prices rose by just 0.1%, the smallest increase among all countries apart from Finland, where prices fell. This disparity highlights the varying dynamics within the EU's housing market.
In Italy, the increase was just above the EU average at 5.2%, while Germany recorded a modest rise of 1.4%, only slightly higher than France. These figures suggest that while some countries are experiencing robust growth, others are struggling to keep up with rising demand.
House prices also rose by double digits in Lithuania (11.9%), Hungary (11.2%), Latvia (10.9%), and Czechia (10.1%). Price growth remained strong in Slovenia (9.3%), Denmark (8.3%), and Romania (7.8%). These countries have also seen a surge in demand, driven by factors such as economic growth, population expansion, and the appeal of their real estate markets.
House price increases exceeded the EU average in Ireland (6.8%), Poland (6%), and the Netherlands (5.2%). Among the Nordic countries, Denmark's increase exceeded the EU average by more than three percentage points, while the others remained below it. Norway recorded a rise of 4.6%, Iceland 2.8%, and Sweden 2.6%. These figures suggest that while some countries are experiencing robust growth, others are struggling to keep up with rising demand.
Over this period, Romania recorded the highest inflation at 8.6%, followed by Iceland (4.7%) and Croatia (4.1%). In Romania and Iceland, house price increases were below inflation, making them the clearest outliers. However, in the top five countries for house price rises — Portugal, Bulgaria, Slovakia, Croatia, and Spain — prices rose by around 10 percentage points above inflation. This disparity highlights the varying dynamics within the EU's housing market.
Croatia leads Europe with nearly 40% rent growth, a significant outlier compared to the 3% rise in rents across the EU. Mikk Kalmet, a real estate expert at Global Property, noted that rents in Croatia were showing strong growth, mainly because the country is an attractive short- and long-term rental destination, especially compared with more established markets such as Spain and the south of France. Bulgaria (10.5%) was the only other country to record double-digit rent growth, followed by Iceland (8.4%), Romania (8.4%), and Greece (8.1%).
Among the EU's four largest economies, Italy (3.8%) was above the EU average, while Spain (2.5%), Germany (2.2%), and France (1.9%) were below. In Latvia (6.7%), Czechia (6.2%), Slovakia (5.7%), and Portugal (5.1%), rent increases exceeded 5%. These figures suggest that while some countries are experiencing robust growth, others are struggling to keep up with rising demand.
Even over shorter periods, increases in house prices and rents were significant. Compared with the fourth quarter of 2025, house prices increased by 1.2% and rents by 0.7% in the EU in the first quarter of 2026. Compared with the 2025 annual average, house prices in the EU increased by 2.9% and rents by 1.8% in the first quarter of 2026. In Croatia, rents rose by almost 25% in the first quarter of 2026 compared with the 2025 annual average. These figures highlight the rapid pace of change in the housing market and the need for policymakers to respond accordingly.
Commenting on house price rises in late 2025, Mikk Kalmet said high construction costs and a lack of new homes continued to limit supply, while stronger demand kept pushing prices higher. This analysis underscores the complex interplay between supply and demand in the housing market and the need for policymakers to address these challenges to ensure a stable and affordable housing market for all.
