In its spring economic forecast, the European Commission highlights the upward trend in property prices, noting that "after falling in the second and third quarters of 2023, property prices rose again in 2024".
"The recovery in prices has been accompanied by a recovery in transactions, to a level comparable to that recorded in the pre-pandemic years," Brussels points out, adding that in the fourth quarter of 2024, nominal house prices in the EU were 4.9% higher than a year earlier, surpassing the peak of mid-2022.
In real terms, the price increase was more modest, but still stood at 2.1% over the year.
Across countries, the magnitude of the increase varied considerably, with Bulgaria, Hungary, Portugal, Spain, the Netherlands, Poland and Croatia all recording annual growth rates above 10% in the fourth quarter of 2024, the Commission highlights.
Portugal was the EU country with the third-highest annual growth rate in house prices at the end of last year, at 11.6%.
The European Commission also highlights that property buyers now have to deal with high prices given their borrowing capacity, given that after the pandemic, the relationship between property prices and household borrowing capacity (which can be considered an indicator of affordability) "has increased sharply in the EU".
In most EU countries, the increase in real house prices has outstripped households' borrowing capacity over the past five years, "highlighting the increasing difficulties families are having in acquiring housing through credit".
In Portugal, households' debt capacity, adjusted for inflation, fell by around 25% but house prices rose between 2019 and 2024.
Despite this scenario, Brussels predicts that household borrowing capacity in the EU will improve in 2025 and 2026, "driven mainly by positive contributions from household incomes – as real wages are expected to increase by 1.6% this year and 1.1% in 2026".