Capital values across Europe’s top 25 residential city markets have returned to positive territory, according to PATRIZIA.

In its PATRIZIA INSIGHT — European Residential Markets report, the manager says all the markets in the top 25 cities were in positive territory by the second quarter of 2025. However, divergence between groups has widened. The top quartile of cities saw prime capital value growth of 13 percent year-over-year up to the second quarter of 2025, while the lower quartile managed only 3 percent.

The reports says strong fundamentals are supporting Europe’s housing markets. Inflation is nearing target levels, unemployment is low, house prices are rising again, construction is not meeting demand, and building costs are stabilising.

While fundamentals are strengthening, cross-border investment into European residential has yet to fully recover. PATRIZIA says investment activity is highly concentrated in only a few specific markets. US i