ECB rate dynamics in 2025–2026 were shaped by energy inflation and geopolitical factors, leading to a cautious pace of rate reductions and influencing affordability.

Mortgage costs fell thanks to ECB rate cuts starting in 2024 and continuing into 2025, boosting affordability and transaction volumes across the eurozone.

Croatia saw a 4.1% decline in sales in 2025 despite a 14.3% rise in prices and a 39.1% jump in rents, illustrating a disconnect between price levels and household purchasing power.

Europe’s housing market regained momentum in 2025, with rising sales across most countries despite ongoing price increases.

Belgium and Austria led annual sales growth at over 20%, with Lithuania and Belgium also surpassing 20% growth; France and Spain showed broader shifts, including a notable turnaround for France from 2024 to 2025 and Spain rising modestly.

Supply constraints remained, with high construction costs and limited new housing activity keeping supply tight and sustaining price pressures even as transactions recovered.

Slovenia posted near-30% growth driven by rate cuts, moderate prices and improving consumer confidence, despite a small 2025 transaction volume around 11,000.

France returned to over one million sales in 2025, with price growth modest at about 0.1% year over year, signaling demand recovery rather than price-driven speculation.

France topped the region in 2025 with more than one million homes sold; the Netherlands sold around 265,000 homes; Hungary, Belgium, Portugal and Norway sold between 130,000 and 160,000, while Slovenia posted the highest percentage gain despite a small market.

The 2026 outlook depends on whether the ECB sustains rate cuts and how energy-driven inflation affects affordability that supported the 2025 rebound.

Improvements in mortgage affordability, stabilizing Euribor and bank rates, and better financing conditions supported rising demand and a broader EU recovery, but high construction costs and limited supply tempered momentum.

Croatia also faced rent surges and high construction costs, while Bulgaria and Poland saw small sales declines, contributing to a mixed regional picture of demand.