The European real estate market now resembles "quicksand", with the latest official Eurostat data revealing a Europe cut in two.
On the one hand, countries such as Cyprus and Austria are experiencing an unprecedented construction and purchasing boom, while on the other, Luxembourg and Croatia are facing an unprecedented collapse in trading volumes. While the majority of European states are under pressure, Cyprus confirms the title of one of the strongest real estate regions in the Mediterranean.
House prices in Cyprus saw an impressive annual increase of 7.9% in the second quarter of 2026, running much faster than the EU average (+4.7%). The data also show that there is a steady increase in rents, which increased by about 4% compared to the 2025 average, and demand (transaction volume) remains at high levels, with the number of sales increasing by +13.6% in the first quarter and +17.1% in the second quarter of 2026.
It is important to note that in the rental market, Cyprus is recording a smooth and controlled rise. This situation is dramatically different from the explosive conditions of Romania, where rents made a shocking jump of +41.2%, or Croatia (+22.1%).
At the same time, Cyprus surpasses Greece in terms of stability, which is facing a more intense pressure on rents (+6.2%). This moderate increase, combined with the fact that Cyprus has the lowest percentage of young people living in overcrowded conditions in the EU (3.5%), confirms the resilience and high quality of the domestic real estate market.
According to Eurostat data, specific countries are experiencing a severe contraction in the volume of real estate sales on an annual basis:
➧ Croatia: The most stressed market on the European list. It plunged -42.2% in the first quarter of 2026 and -33.3% in the second quarter. The decline was continuous, since the year 2025 was also negative (-4.1%) due to the decrease in old properties (-7.2%).
➧ Luxembourg: Although 2024 jumped +47.1%, 2026 sharply turned into a deep recession with -35.1% in the second quarter. It is noteworthy that in 2025 sales of newly built properties had increased by +36.2%.
➧ Bulgaria: Consistently negative with a decline of -18.5% (first quarter 2026) and -18.1% (second quarter 2026). In 2025, sales of existing properties fell by -5.0%.
➧ Finland: Significant decline of -17.7% in the second quarter of 2026, largely influenced by the crash of newly built homes (-22.3% in 2025).
➧ Portugal: Shows a milder but clear decline, with -8.7% in the first quarter of 2026.
In all the countries under review, the volume of transactions for newly built houses was lower than that of existing ones and consequently, it is the changes in older/existing properties that essentially shape and determine the overall course of the real estate market.
