House prices and rents are skyrocketing across Europe, leaving many households struggling to keep up. In the first quarter of 2026, the EU saw a 5.1% rise in house prices and a 3.0% increase in rents, outpacing inflation in most countries. This trend is particularly concerning as households already spent a staggering 18.9% of their disposable income on housing in 2025, with some countries exceeding 30%.
The countries that saw the largest annual rise in house prices and rents during this period are a mix of Eastern European and Western European nations. Portugal leads the pack with a 17.8% increase, followed by Bulgaria (14.8%), Slovakia (14.4%), and Croatia (14.3%). These countries are experiencing a surge in demand, driven by factors such as strong economic growth, population expansion, and increasing attractiveness as tourist destinations.
Among the EU's largest economies, Spain stands out with a 12.8% increase, ranking fifth overall. France, on the other hand, barely moved with a 0.1% increase, the smallest among all countries apart from Finland, where prices fell. This contrast highlights the varying dynamics within the EU.
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 the housing market in Germany is still relatively stable compared to its European counterparts.
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%). Ireland, Poland, and the Netherlands also saw increases exceeding the EU average.
However, the story is not all positive. In some countries, house price increases are outpacing inflation, making housing even less affordable. Romania recorded the highest inflation at 8.6%, and in both Romania and Iceland, house price increases were below inflation, making them clear outliers. But in the top five countries for house price rises, prices rose by around 10 percentage points above inflation, indicating a significant disconnect between supply and demand.
When it comes to rents, Croatia stands out as a significant outlier with a 39.1% increase over the period. This is largely due to the country's growing popularity as a short- and long-term rental destination, especially compared to more established markets like Spain and the south of France. Bulgaria (10.5%) and Iceland (8.4%) also recorded double-digit rent growth, followed by Romania (8.4%) and Greece (8.1%).
The disparity in rent growth among the EU's largest economies is notable. Italy (3.8%) was above the EU average, while Spain (2.5%), Germany (2.2%), and France (1.9%) were below. This further emphasizes the varying housing market dynamics across the continent.
Even over shorter periods, increases in house prices and rents were significant. In the first quarter of 2026, compared to the fourth quarter of 2025, house prices increased by 1.2% and rents by 0.7% in the EU. When compared to 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 to the 2025 annual average, highlighting the rapid pace of change.
Mikk Kalmet, a real estate expert, attributed the house price rises in late 2025 to high construction costs and a lack of new homes, which continue to limit supply. Stronger demand, driven by economic growth and population expansion, is keeping prices high. This dynamic is likely to persist, especially in countries with strong economic fundamentals and growing populations.
In conclusion, the European housing market is experiencing a tumultuous period, with rising prices and rents outpacing inflation in many countries. The disparity in performance among nations highlights the complex interplay of economic, demographic, and geographic factors shaping the market. As households struggle to keep up, policymakers and real estate experts must address the underlying causes of these trends to ensure a more sustainable and equitable housing future for all.
