European housing prices rose significantly, driven by construction costs and low supply; Romania shows mixed trends.
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European housing prices have risen by 48% in less than ten years, with Hungary seeing the largest increase at 173% and Finland the smallest at only 5%; Romania is near the European average with a 48.4% rise. Key drivers for this price inflation include increased construction costs, mortgage rates, limited housing supply due to reduced building activity, and property purchases as investments. Rental prices across the EU have also risen by an average of 18% between 2010 and 2022, partly due to short-term rentals reducing available stock. In 2023, a significant portion of European households reported housing costs exceeding 40% of their disposable income. While over two-thirds of Europeans own their homes, many live in inadequate spaces. Recent reports suggest continued moderate price growth in Spain, Portugal, and Belgium, supported by a stable labor market. In Romania, residential property prices grew above the EU average in Q2 2024 but below regional peers; however, Bucharest remains more affordable than other European capitals. Experts anticipate continued, though slower, price increases in 2025 due to factors like stricter thermal construction regulations favoring new builds. Spain’s housing price hikes have been heavily influenced by rising construction costs—over 25% between 2019 and 2022—and a shortage of new homes, compounded by a structural lack of skilled labor in the construction sector.
