House prices in the EU rose by 5.5% in the fourth quarter of 2025 compared with the same period in 2024. Several countries recorded much stronger increases, exceeding 10%.Industry experts point to improving financing conditions, particularly interest rates, as a key driver of the trend.So, which countries saw the highest increases in house prices across Europe in 2025? What factors drove price developments in late 2025?Improving financing conditions”Price developments in late 2025 were shaped by improving financing conditions, which saw the return of demand,” Michael Polzler, CEO of real estate company REMAX Europe, told Euronews Business.“As interest rates stabilised, buyers who had previously postponed their house hunting re-entered the market.”Mikk Kalmet from Global Property Guide also pointed to the recovery of demand after the interest rate hikes in 2023–2024.”As Euribor and general bank interest rates stabilised, the market bounced back slightly, as people who were hesitant in purchasing during uncertain times felt some predictability from late 2024 onwards,” he told Euronews Business.Hungary leads the house price growthHungary recorded the highest annual increase in house prices in the fourth quarter of 2025 with a rise of 21.2%, according to Eurostat.“Hungary, the top performer, has pushed subsidised home ownership schemes in recent years, which have boosted demand alongside strong investor activity,” Kate Everett-Allen, head of European residential research at Knight Frank, told Euronews Business. Strong gains in Portugal, Croatia and SpainIn the eurozone, Portugal and Croatia also saw sharp increases at 18.9% and 16.1% respectively. Spain followed with a 12.9% rise.Everett-Allen said strong international demand had been a key factor in all three countries.Lifestyle migration, second-home buyers and inward investment (including digital nomads, retirees and foreign buyers) remained robust even as domestic borrowing costs rose, particularly in coastal and urban markets.Polzler said the strongest price growth in Portugal, Croatia and Spain was concentrated in key urban and coastal areas where demand has been highest.“In Portugal, price growth has been driven by very limited supply, particularly in Lisbon, Porto and surrounding areas, but also by targeted government support measures,” he said. He explained that the introduction of a public guarantee scheme for young first-time buyers — allowing up to 100% mortgage financing with the state guaranteeing up to 15% of the property value — was a significant driver of demand.“It’s a clear seller’s market, and limited supply combined with this policy has enabled sellers to maintain strong pricing power,” he said. Appeal of tourist marketsPolzler said cities such as Valencia and Madrid had outperformed national averages in Spain, supported by both domestic and international demand.Sustained foreign investment and the continued appeal of these markets have reinforced price growth.Kalmet also underlined that stronger price growth in these countries was mostly driven by their attractiveness as tourist destinations.International buyers, second-home demand and the expansion of short-term rentals have increased pressure on housing markets, particularly in coastal and urban areas.Other countries with over 10% increaseSlovakia (12.8%), Bulgaria (12.6%), Latvia (11%), Lithuania (10.8%) and Czechia (10.4%) also recorded strong house price growth exceeding 10%.Everett-Allen pointed out that Central and Eastern Europe, along with Iberia, have been standout performers over the past 12–18 months, broadly aligned with stronger GDP growth.”These markets are also benefiting from infrastructure investment and capital inflows, both lifestyle-driven and linked to longer-term economic prospects,” she said. Kalmet added that prices have tended to rise faster in Central and Eastern Europe, partly because incomes are catching up and housing started from a lower base.House price increases in Denmark (7.6%), Ireland (7%), Romania (6.7%), the Netherlands (6.2%), Malta (6.1%), Cyprus (6%), Slovenia (5.8%) and Norway (5.7%) were also above the EU average, although by a smaller margin.Finland was the only country among 29 European markets where house prices fell, with a 3.1% annual decline.House price growth in the EU’s ‘Big Four’Among the EU’s ‘Big Four’ economies, Spain stood out with a 12.9% increase. Italy recorded a 4.1% rise.Germany saw a 3% increase in house prices, while France ranked third from the bottom across Europe, with just a 1% rise.“France is still recovering from the sharp market correction in 2023 and 2024, when rising mortgage rates and inflation significantly impacted demand,” Polzler said. “The market is stabilising, with only modest price movements and cautious buyer sentiment.”Everett-Allen said Germany’s housing market had been more exposed to cheap debt, weak income growth and a rental system that allowed demand to retreat quickly, alongside high regulatory and entry costs.