How has the real estate market in Europe changed, by 2025?

Europe's real estate market showed signs of recovery and stability in the first quarter of 2025, although dynamics varied by region and segment.

General economic situation: The eurozone economy showed improvement, with a projected GDP growth of 1.5% in 2025, up from 0.8% in 2024. Countries such as Spain (2.6%), Denmark (2.1%) and the UK (1.8%) are leading the growth rate. Improving economic conditions and lower interest rates are expected to encourage property investment and increase household incomes.

Investment activity: Commercial property investment in Europe grew 21% year-on-year in 2024. However, global financial instability and geopolitical events could slow the pace of recovery in 2025.

Housing market: According to Fitch Ratings, six out of seven European countries are expected to see house prices rise in 2025, although the pace of growth will vary. In France, prices are likely to bottom out this year.

Commercial property segment: there is growing interest in non-residential assets such as offices, retail space and residences for students and seniors. Madrid stands out as one of the most dynamic office markets in Europe, with polarisation between central and peripheral areas.

The changing real estate market in Germany 2025:

Transactions in the German real estate market totalled around €35 billion in 2024, with a forecast increase to €40-42 billion in 2025. However, these figures remain close to their lowest levels in a decade, indicating the sector's continued difficulties. Lower interest rates from the European Central Bank are expected to support the market, contributing to a moderate rise in house prices.

Changing the real estate market in France 2025:

The French real estate market is entering a new cycle, with growth potential in the retail and logistics sectors on the back of recovering consumer demand. Investors are showing interest in these segments, expecting stable earnings and capitalisation growth.

Changing real estate market in the Czech Republic 2025:

At the beginning of 2025, the Czech real estate market is showing strong development. Lower mortgage rates are stimulating demand from buyers and investors, especially in large cities such as Prague and Brno. Rising prices for energy-efficient housing and increasing interest in suburbs and regions testify to the dynamic development of the market.

Changing real estate market in Poland 2025:

The Polish real estate market continues to attract the attention of investors, especially in major cities such as Warsaw and Krakow. Property price growth in these cities is outpacing many European markets, making them attractive for capital investment.

Changing the real estate market in the UK 2025:

Analysts predict that the UK real estate market in 2025 will be favourable for buyers. Lower interest rates and an increase in housing supply provide buyers with better bargaining power. House prices are expected to rise by 3 per cent in 2025, with possible further growth in the following years. However, the end of stamp duty relief for first-time buyers in spring 2025 could affect market dynamics. London is likely to outperform other regions with price growth of 4% at the end of 2025, partly due to staff returning to offices.

The changing real estate market in Spain 2025:

It is predicted that investment in the Spanish real estate market could reach €15 billion in 2025, an increase of 10-20% year-on-year. Growth is driven by stabilising monetary policy, lower interest rates and strong demand for housing, especially in areas such as Marbella. Property prices are expected to continue to rise, especially in the residential and hotel segments.

Changing real estate market in Italy 2025:

The Italian real estate market in 2025 is characterised by a limited supply of new buildings and continued price growth. Lower interest rates are fuelling demand, especially in major cities such as Milan, Rome and Naples. Home sales are expected to increase by 5.7 per cent year-on-year in 2025, with prices rising by 3.1 per cent nationally. Milan remains the most expensive market, with prices of up to €5,700 per square metre.

Changing real estate market in Austria 2025:

Austria, especially Vienna, has seen a steady rise in property prices, driven by high demand and limited supply. House prices are expected to increase by 4-5% in 2025, with investment in commercial property expected to reach €3 billion. Government programmes to subsidise mortgages and stimulate construction are available, supporting housing demand.

Conclusion:

In the first quarter of 2025, the real estate market in Europe showed signs of stabilisation and recovery. Countries with highly developed economies, such as the UK and Germany, have seen moderate price growth, supported by falling interest rates and rising supply. At the same time, southern countries such as Spain and Italy continue to see strong demand, particularly for the premium segment, fuelling price growth. Central and Eastern European countries such as the Czech Republic and Poland are also seeing increased interest from buyers and investors, supported by lower mortgage rates and strong demand for energy efficient housing. Overall, the real estate market in Europe in 2025 is characterised by positive trends, but different regions show different growth rates and characteristics.