House prices in Europe over the last 100 years: historical review and analysis

The centuries-old history of the European housing market reflects the continent’s economic, social and political transformations. Over the past 100 years, house prices in Europe have undergone dramatic changes, following the rhythm of wars, reconstructions, demographic movements, urbanization and financial innovations. From the devastation of World War I, through post-war reconstruction, the industrial boom, the two oil crises of the 1970s, the globalization of the late 20th century, the 2008 financial crisis and the COVID-19 pandemic, each era has left a unique mark on the dynamics of real estate prices.

In the early 20th century, the housing market in Europe was highly regionalized and dominated by the rental sector. In the large cities of Western and Central Europe, housing was owned by small and large private investors, while renters were the majority. In many countries, the percentage of homeowners was below 30%, and the very concept of "affordable housing" depended on state intervention or social policy. In Eastern Europe, which would later fall under planned economies, urban property ownership was concentrated in the hands of a limited elite and institutions.

The Great Depression of the 1930s and the subsequent Second World War devastated Europe's housing stock. In France, Germany, Poland and the Balkans, hundreds of thousands of buildings were demolished, leading to a housing shortage and social problems. After 1945, most European countries undertook massive reconstruction programs: millions of apartments and social housing were built, often with state participation and regulated rents. In the Eastern Bloc, property was nationalized and distribution was centrally planned. In the West, models such as housing councils in Britain, municipal housing in the Netherlands, and cooperatives in Scandinavia developed.

In the 1960s and 1970s, economic recovery led to mass urbanization. During this period, the share of homeowners began to grow: many families were able to purchase homes thanks to mortgage lending and tax incentives. The demand for new homes led to large-scale construction on the outskirts of large cities and the emergence of modern suburbs. At the same time, the oil crises of the 1970s put an end to the illusion of constant growth - inflation and economic difficulties led to stagnation in prices in a number of countries.

In the 1980s and especially in the 1990s, with the liberalization of financial markets, the housing market became the main form of long-term savings and investment. Bank loans became increasingly accessible, and the percentage of homeowners in Europe rose to over 60%. In countries of Central and Eastern Europe, after the collapse of socialist regimes, the housing stock was massively privatized. A huge number of apartments were sold to tenants at symbolic prices. This led to a strong dominance of ownership over the rental sector in these regions.

Since 2000, Europe has experienced a new wave of price growth, especially in Western and Northern Europe. Cheap credit, demographic pressure in cities, and increased investment demand from institutional and foreign investors have pushed prices up. In the period 2000–2007, some markets – notably Spain, Ireland, and the United Kingdom – experienced a boom, followed by a dramatic decline after 2008. In other countries, especially in Central and Eastern Europe, prices increased by 200–300% over a decade.

After the global financial crisis, between 2009 and 2013, prices in a number of countries fell or stagnated, but a new growth began after 2015. This time the drivers were record low interest rates, urban concentration and the globalization of housing investment. At the same time, a shortage of new construction and delayed administrative procedures limited supply, especially in megacities such as Paris, Berlin and Stockholm.

The 2020 pandemic initially led to a freeze in deals, but the effect was short-lived. From 2021 onwards, a new price surge has been observed across Europe – driven by a combination of cheap credit, demand for more spacious homes, inflationary expectations and a shortage of quality supply. By 2024, some countries are reaching historic highs in real and nominal terms.

Regionally, Eastern Europe has seen the largest relative price increase in the past 100 years – more than a 26-fold increase, according to inflation-adjusted data. This is due to the extremely low base value at the beginning of the 20th century, the long period of undervaluation during socialism, and the sharp market surge after 1990.

The graphs by region clearly show that despite the general upward trend, there are large differences in price levels (euro/sq m) and housing affordability. In Western and Northern Europe, housing is the most expensive in absolute terms, but incomes are also significantly higher there. In Southern Europe, affordability is a problem due to high unemployment and lower incomes. In Central Europe, the market is stabilizing, while in Eastern Europe – especially in the metropolitan areas – prices are approaching the European average, despite lower incomes.

The future of the European housing market is dependent on a number of factors: demographics, migration, income, regulations, sustainable construction and ECB policy. High prices raise questions about affordability, especially among young households. The debate on the balance between ownership and renting is intensifying, and the role of the state as a regulator is once again coming to the fore.

History shows that the housing market in Europe follows a long-term upward trend, interrupted by crises and corrections. However, these cycles do not erase the basic truth: housing remains not only a physical necessity, but also a key financial asset, a symbol of security and a generator of well-being in European society.