House prices across Europe are set to rise in 2025, with construction struggling to meet the growing demand in many countries, according to Fitch Ratings’ housing and mortgage outlook. Prices are expected to increase in most markets, although the pace will vary depending on factors like government support, inflation, and supply constraints.
Fitch predicts “Nominal home prices will grow in the low to mid-single digits for most countries in each of the next two years,” driven by a combination of low unemployment, real wage growth, and lower inflation, all of which have boosted buyers’ disposable incomes.
The Netherlands, Canada, Brazil, and Mexico are expected to experience the strongest growth in home prices in 2025. In Canada and the Netherlands, government programs for first-time buyers, along with wage increases, are likely to fuel demand. Meanwhile, in Brazil and Mexico, rising construction costs will drive price growth.
Real household income in the Eurozone continues to improve, further boosting housing demand and prices across most member states. However, France stands out as an exception, where prices are forecast to fall due to affordability challenges and political uncertainty, despite the effects of limited supply and lower interest rates. The report notes that the pace of price decline in France is expected to slow compared to last year, with a potential rebound in 2026.
In the Netherlands, home price growth is expected to decelerate slightly from 13% this year to between 8% and 10% in 2025, with further moderation to 6% to 8% in 2026. Despite the slowdown, the country will still see one of the highest growth rates globally, primarily driven by limited housing supply and high construction costs. Population growth and smaller households are increasing demand, while government programs for first-time buyers could provide an additional boost. However, tighter fiscal policy may limit purchasing power.
Elsewhere in Europe, home price growth is expected to pick up in Germany and Spain. In Spain, prices are expected to rise by 4% to 6% in 2025, with a further increase of 5% to 7% in 2026, driven by rising consumer confidence, falling interest rates, and low housing supply. In Germany, growth is expected to be between 2% and 4% in both 2025 and 2026, a slight increase from the 1.5% growth estimated for 2024. While moderate wage growth may limit affordability, rising rents are expected to make home ownership more attractive.
In the UK, Fitch expects home prices to rise modestly by 2% to 4% in 2025 and 2026, supported by lower mortgage interest rates, a strong labor market, and rising nominal earnings. In Denmark, prices are predicted to increase by 2% to 4% in both years due to lower interest rates and moderate disposable income growth.
Italy is expected to see more modest price increases, with growth ranging from 0.5% to 2.5% in 2025 and 2026, as demand cools due to high mortgage rates.
