After falling in the second and third quarter of 2023, housing prices started growing again in 2024. After rising steadily since 2013 and picking up in the aftermath of the pandemic crisis, nominal house prices in the EU experienced a mild decline in 2023. By end 2023, however, nominal house prices had broadly recovered their losses and increased more vigorously in 2024. The price recovery was accompanied by a recovery in transactions, to a level comparable to that recorded in the pre-pandemic years. By 2024-Q4, nominal house prices in the EU were 4.9% higher than a year earlier, surpassing the mid-2022 peak.
In real terms, the price increase was more modest, but still 2.1% over the year. The magnitude of the increase varied considerably across Member States (see Graph 2). Bulgaria, Hungary, Portugal, Spain, the Netherlands, Poland, and Croatia recorded annual growth rates above 10% in 2024-Q4. At the other end of the spectrum, Sweden Germany, Austria, and Luxembourg — which experienced more significant contractions in 2023 — recorded more modest gains. France and Finland, in contrast, continued to see year-on-year declines.
Going forward, further improvements in households’ borrowing capacity are set to foster housing demand, amid increasing prices. After an improvement in 2024, households’ borrowing capacity in the EU is expected to improve further in 2025 and 2026, driven mainly by positive contributions from household incomes – as real wages are projected to increase by 1.6% this year and 1.1% in 2026. Rising house prices provide a positive signal to housing developers. Indeed, housing investment is set to start growing again this year. Still, the supply of new housing is set to respond with a lag to lower financing costs and higher prices.