Investment volume
The residential investment volume in Europe showed positive signs in Q1 2025, with the highest Q1 investment volume reaching €8.9bn since Q1 2022.
There were fewer but bigger deals in residential that pushed up the sector’s share of volume to 20% of total real estate investment on a rolling year.
Residential prices
Residential prices across European cities are expanding on average at +5.3% in Q4 2024 vs Q4 2023.
In most European cities, mortgage rates have fallen because of monetary easing: Euro area mortgage rate stands at 3.32% in Q1 2025. However, household housing purchasing power (HPP) is expected to remain weak across cities.
Rents
Demand in the letting market continues to rise despite high rental values. The factors supporting this dynamic include lower purchase affordability, supply
shortages created in part by rent regulations, greater profitability of the short-term tourism rental market and a lack of new housing construction.
Market fundamentals
With inflation stabilized, central banks have initiated a new cycle of monetary easing.
The total number of European housing permits was 2M in 2024, an 11% decrease compared to the long-term average.
Rental demand is expected to remain high.
The strength of rental market regulations varies across European cities. Measures such as rental uplift limits were introduced in some cities.
