Soaring House Prices Across Europe: A Painful Reality
Soaring housing costs in European markets: Identifying the regions with the steepest price increases
In a nutshell, between 2015 and 2024, house prices in the EU skyrocketed by approximately 53%. This astronomical increase resulted in dwellings costing three times as much as they did in 2015, especially in countries like Hungary and Iceland.
For instance, in Hungary—the EU country witnessing the biggest jump in prices—dwellings now cost an average of €250,000 to €1.5 million in its capital, Budapest. Meanwhile, in Iceland, prices have almost doubled, with average purchase prices around €558,000 in Reykjavík and surrounding areas.
Countries with a Triple Whammy
Other European nations, including Lithuania, Portugal, the Czech Republic, Bulgaria, Estonia, and Poland, experienced property prices more than doubling over the past nine years. Interestingly, Finland remains somewhat an exception, with its property market showing relatively minimal growth. However, the cost of dwellings in Helsinki remains significant, almost reaching €500,000.
A Slowing but Still Steep Climb for Iceland
Even though the Bank of Iceland reports a slowing pace of house price inflation—with year-on-year house price inflation at 8% in March—it's clear that the housing market in Iceland remains a hot commodity.
The Price of Renting Continues to Rise
Regrettably, renting a house in Europe has become just as expensive, even though it increased at a slower pace than house prices. Between 2010 and Q4 2024, rents increased by 26.7% in the EU. Countries like Estonia, Lithuania, Iceland, and Hungary have experienced the steepest rental price increases, making it increasingly challenging for many Europeans to secure affordable housing.
The Costliest Countries to Live In
Unsurprisingly, housing costs have risen substantially across the EU, including paying for utilities. Estonia and Poland have seen the most significant increases in housing costs, with residents paying double what they did ten years before. Ireland, however, exceeds the norm as the most expensive European country for housing, followed by France, Germany, Italy, and Spain.
A European Housing Crisis: The Young and the Restless
The high rental and house prices have led to a growing number of young Europeans postponing their adult independence for several years. According to Eurostat, young Europeans leave their parents' homes at the average age of 26.3. However, the age varies significantly throughout the EU, with Finnish youngsters leaving home earlier than their Croatian counterparts.
Cash-strapped Europeans Look to Real Estate for Investment
In 2023, Cyprus emerged as the country that invested the most in properties, investing 8.6% of its GDP in property, followed by Italy, Germany, and France. However, Poland and Greece reported the lowest rates, representing just 2.2% and 2.3% of their respective GDPs. The average investment in housing across the EU sat at 5.8% of GDP in 2023.
All in all, the soaring housing costs have make life increasingly difficult for many Europeans, forcing young generations to put off important milestones and contributing to a growing housing crisis. In the coming years, it'll be intriguing to see how this trend affects the future of Europe's entire demographic.
Additional Insights: Between 2010 and 2025, house prices in the EU rose by approximately 48–53%, with some countries experiencing much steeper increases. For example, in Hungary, prices tripled in this period, while in Iceland, prices reached about 2.5 times their 2015 levels. Rents in the EU increased by 26.7% between 2010 and Q4 2024, with regional differences being more pronounced in certain countries, especially urban centers, and less so in others. These figures reflect the rapid escalation in housing costs across much of Europe, driven by factors such as construction expenses, limited supply, and increased demand for property investment.
- Amidst these soaring house prices in Europe, individuals are increasingly turning to real-estate investments as a means of personal finance, as evidenced by Cyprus investing 8.6% of its GDP in properties in 2023.
- With the substantial rise in housing costs and stagnating personal income, many young Europeans are struggling to secure affordable housing, leading to a postponement of important life milestones, indicative of a growing housing crisis.
