European home sales rebound as lower borrowing costs revive demand
Falling interest rates ended a two-year property slump across Europe in 2025, driving up transaction volumes but doing little to resolve a chronic shortage of affordable housing.
Home sales rose in 17 out of 20 European countries last year as stabilising borrowing costs encouraged buyers to return to the market. After a period of uncertainty driven by elevated interest rates, the release of postponed demand fuelled a broad recovery in transaction volumes.
The shift carries significant weight for the broader European economy. According to the European Central Bank, real estate remains the primary store of household wealth in the eurozone. Increased transaction activity therefore directly improves consumer balance sheets and financial confidence across the bloc.
France recorded the most notable turnaround, with sales exceeding one million units following a decline in 2024, while prices rose just 0.1 percent. Belgium, Austria, and Lithuania all posted annual growth exceeding 20 percent. The Netherlands saw 265,000 homes change hands.
Slovenia recorded the sharpest percentage increase at 29.9 percent, though its total volume was the lowest at 11,000 homes. Hungary, Belgium, Portugal and Norway each recorded between 130,000 and 160,000 sales.
The broader European trend masked sharp regional disparities. Croatia saw home sales fall for a fourth consecutive year, dropping 4.1 percent even as house prices surged 14.3 percent and rents soared by 39.1 percent. "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," said Mikk Kalmet, real estate advisor at Global Property Guide.
Bulgaria and Poland also recorded slight declines. In total, only three countries saw sales fall in 2025, a marked improvement from the six that contracted in 2024.
While lower Euribor rates have successfully unlocked demand, the supply side of the market remains heavily constrained. High construction costs and limited building activity continue to restrict the availability of homes across the continent. "Residential property transactions are mainly influenced by mortgage affordability, interest rates, household incomes, employment, consumer confidence, and housing supply,” Kalmet noted.
This structural imbalance suggests that even as transaction volumes normalise, upward pressure on prices will persist. Spain maintained steady growth of 5.4 percent, indicating resilient demand in one of Europe's largest markets. However, the failure to build enough new homes means the current recovery could ultimately widen the affordability gap for prospective buyers.
