European house prices will increase by more than 4 percent in 2026, according to S&P Global Ratings. It has made modest forecast revisions since July 2025 that reflect labor-market and supply dynamics.
Considering slower demographic growth and aging populations, the strength of housing demand in Europe may appear counterintuitive. In practice, however, the number of households in Europe is increasing roughly 2.5 times faster than the total population.
“Changes in living arrangements and lifestyle preferences, amplified by the pandemic, are central to this trend,” said Sylvain Broyer, S&P Global Ratings’ EMEA chief economist.
The housing construction activity will pick up pace this year due to rising construction confidence, stabilizing order books, and stronger hiring intentions. Even so, supply conditions remain tighter than normal.
On a price-to-income basis, European housing markets are, on aggregate, less overvalued than in 2021 and 2022
