European housing markets face rising prices and supply shortages

European housing markets are experiencing significant price increases and structural supply shortages. In the Eurozone, housing prices rose by 4.0% year-on-year in the second quarter of 2026. Bulgaria recorded one of the highest growth rates in the region, with a 15.5% annual increase.

In Spain, real estate prices rose by 14.7% year-on-year in the third quarter of 2026. While the pace of growth has moderated compared to previous quarters, prices remain high, with the median value reaching 2,129 euros per square meter. This trend is accompanied by a growing housing deficit; the Banco de España projects that the accumulated shortage of homes in Spain will exceed one million units by 2028.

Financial conditions for buyers are also tightening. In Spain, the average mortgage amount increased to 180,785 euros, a 10.9% rise from the previous year, even as the total number of mortgage operations declined. In Galicia, the increasing cost of living and restrictive credit conditions have made homeownership difficult for middle-class families. Meanwhile, in the broader Eurozone, average mortgage interest rates rose to 3.60% in August, though Bulgarian mortgage rates remained relatively low at 2.42%.