Rental prices in Europe continued to rise during Q1 2025, while developments in purchase prices varied, according to new research by Catella.
In Q1 2025, rental prices surged in 48 of the 59 cities examined across 16 European countries. The unweighted European average now stands at €20.02/sqm per month, marking a 2.4% increase compared to Q3 2024. Dublin recorded the highest rents at €40.00/sqm, also experiencing the largest rental price increase.
London followed closely at €39.30/sqm, with Geneva in third at €34.50/sqm. Conversely, the most affordable rents were found in Leipzig (€10.30/sqm), Liège (€11.05/sqm), and Graz (€11.10/sqm).
While rental prices soared, purchase price developments varied, with some markets showing moderate recovery and others still experiencing slight declines. The unweighted European average purchase price per square meter is €5,696, a 0.9% increase from Q3 2024.
Switzerland dominated the top end of the market, with Geneva (€15,720/sqm) and Zurich (€13,870/sqm) leading the way, followed by London (€13,440/sqm). The most affordable homes were found in Finnish cities such as Jyväskylä (€2,240/sqm) and Oulu (€2,370/sqm).
Dr. Lars Vandrei, Head of Research at Catella Investment Management (CIM), said: "The first quarter of 2025 was once again marked by considerable uncertainty. Nevertheless, we observed moderate growth in purchase prices and stabilised yields. Demand in the rental market remains strong, as reflected in rising rental prices and increasing overcrowding".
A particular concern highlighted in the report is the rising overcrowding, especially among renters. While overall EU overcrowding decreased slightly from 18.1% in 2014 to 16.9% in 2024, the share of renters living in overcrowded homes rose from 20.4% in 2014 to 24.4% in 2024 EU-wide.
This trend is most pronounced in Northern and Eastern Europe, but significant increases are also being observed in Western and Southern European countries like Germany (+4.9 percentage points), Belgium (+4.6 pp), and Spain (+3.8 pp).
The situation is even more acute for renters in Belgium (+9.0 pp), Spain (+8.0 pp), and Ireland (+7.9 pp). In Germany, 18.4% of renters now live in overcrowded housing, a sharp increase from 11.5% ten years ago.
