Poland – an European housing market perspective

The European housing market is a complex organism, responding to shared impulses – decisions of the European Central Bank, shifts in inflation, global economic crises or demographic trends, yet in practice it remains a mosaic of several dozen highly diverse national markets. Differences between them are visible not only in price levels and rent rates, but also in investor activity and housing affordability. These disparities stem from a range of factors, the most obvious of which is the wealth of societies. High housing prices in countries such as Luxembourg, Switzerland, Denmark or the Netherlands are not merely the result of speculation or limited supply – above all, they reflect high wages and stable demand. In these countries, housing is something society can afford, even if purchasing it requires a mortgage spanning several decades. By contrast, in South-Eastern Europe, where incomes are much lower, housing prices are also lower in absolute terms, yet homes remain difficult to access.

Income differences, of course, do not explain everything. Regulatory and institutional factors are extremely important as well. European countries apply very different approaches to residential real estate markets. In some states the market is strongly regulated, particularly with regard to renting, tenant protection and rent controls. Germany and Austria are examples: while regulations stabilize the market, they can also limit investors’ willingness to build new housing. In other countries, such as Ireland or Spain, regulations are more liberal, which supports investment but increases the risk of rapid rises in prices and rents.

Central and Eastern European countries operated for decades under centrally planned economic systems, where a real estate market practically did not exist and housing was allocated through administrative decisions. The political and economic transformation of the 1990s created a market almost from scratch, often without adequate regulations, institutions or experience. As a result, many states in the region are still catching up in terms of infrastructure, urban planning and institutional frameworks, while a high share of owner-occupied housing, a low level of institutional rental supply and a strong role of individual investors remain characteristic features of those markets. Such conditions make them much more prone to sharp price increases during boom periods and more sensitive to changes in credit policy.

An important factor differentiating European housing markets is demographic structure. Ageing societies in Western and Southern Europe have different housing needs than the younger populations of Central and Eastern Europe. In countries with a high share of elderly people, demand for new housing is weaker and the market more often focuses on renovating the existing stock. Conversely, where the population is growing or where migration to cities is intense, demand pressure is much stronger. Internal and international migration is today one of the most important drivers of regional differences. Large cities attract young people, students and foreign workers, which pushes up prices and rents, while smaller towns and peripheral regions often struggle with depopulation and price stagnation. This is closely linked to urbanisation – another element that significantly affects European housing markets. In countries such as France, the United Kingdom or Spain, population concentration in a few major metropolitan areas is very high, creating enormous pressure on the housing markets of Paris, London or Madrid. In countries with more polycentric settlement structure, such as Germany or Italy, demand is distributed more evenly, limiting extreme price growth in individual cities. This helps explain why Munich, Hamburg or Frankfurt are expensive, but price differences between them and other major German cities are not as dramatic as in France.

When listing the most expensive European capitals, one cannot ignore the role of foreign investors. Housing in many European cities has become a global investment asset. International capital flows into London, Paris, Barcelona or Lisbon, treating real estate as a safe haven. This phenomenon affects Central and Eastern European markets to a much smaller extent, although in Poland’s largest cities a significant inflow of foreign capital during the 2006 – 2008 boom was clearly observed. External capital increases competition for a limited number of homes, raises prices and worsens availability for local residents.

Another factor differentiating housing markets is the role of tourism and short-term rentals. In cities such as Barcelona, Lisbon, Venice or Dubrovnik, a significant share of the housing stock has been converted into short-term rental apartments. This has reduced the supply of homes available to residents and contributed to rising prices and rents. In response, many cities have introduced regulations limiting this segment of the market, but their effectiveness varies. In countries, where tourism plays a smaller role, this factor is far less important, showing how local conditions can shape market dynamics.

Finally, differences between housing markets stem from varying social expectations of housing as a good. In some countries, housing is primarily a place to live, while in others it is a key element of wealth building and financial security. Where real estate is treated as a long-term investment, demand is more resistant to economic fluctuations and prices rise faster. Where renting and mobility play a larger role, the market is more flexible and less prone to sudden surges.

So what are the real differences between the housing markets of European countries and cities? To answer this question, it is worth looking at the Deloitte Property Index report. The report is based on data from local Deloitte offices and official national sources. As a result, the analyses cover not only general trends, but also local markets and the comparison includes thirty countries and more than seventy of Europe’s largest cities.

One of the key elements of the report is an analysis of construction intensity, i.e. the number of completed homes per 1 000 inhabitants. In 2024, the clear leader in this area was Turkey, where nearly seven homes per 1 000 inhabitants were delivered (6.85). This result was almost twice as high as the average across the surveyed countries, which stood at 3.61. Interestingly, the next places were taken by Ireland (5.62) and Poland (5.33), which also maintained strong momentum in housing construction, driven by population growth and ongoing urbanisation. Israel recorded the same developer output ratio as Poland. At the other end of the ranking are Bosnia and Herzegovina, Hungary and Spain. In all of these countries, less than two dwellings per 1 000 inhabitants were completed during the period – 1.04, 1.39, and 1.78 respectively.

In absolute numbers, Turkey also ranked first, with nearly 587 000 homes completed in a single year. That is more than 250 000 more than second-placed France (330.4k) and more than twice as many as Germany (252.0k). Poland, with nearly 200 000 completed homes, ranks fourth, ahead of the United Kingdom by 46 000 homes. The lowest construction volumes were recorded in Bosnia and Herzegovina – 3 400 new homes, as well as in Slovenia – 5,100. Interestingly, when viewed against earlier years, Bosnia and Herzegovina was the country with the strongest growth in housing construction. The year-on-year increase in completed homes between 2023 and 2024 amounted to 17.6%.

A comparison of housing prices across European countries also shows a very high level of market diversity. On one hand, there are countries with exceptionally high prices, led by Luxembourg, where the average price of a new home exceeded EUR 8.7k per a square metre. Prices are only slightly lower in Israel, the United Kingdom, Austria and Portugal, where they are close to EUR 5k per a square metre. Interestingly, this group also includes the Czech Republic, where the average price reached  EUR 5 030 per square metre – clearly higher than in countries such as Germany or the Netherlands. On the other hand, there are South-Eastern European countries such as Turkey or Bosnia and Herzegovina, where prices do not exceed EUR 1 500 per a square metre.

Despite the record growth dynamics at the level of 19.3% annual increase, the average housing price in Poland was clearly lower than in the most expensive European countries, reaching EUR 2 792 per a square metre, slightly above the average price recorded in Italy (EUR 2 741). This result places Poland roughly in the middle of the European ranking. However, what clearly sets Poland apart from most markets, is the pace of price growth. According to the report, Poland recorded the highest price increase among all surveyed countries – 19.3% year on year. This growth resulted from several overlapping factors: strong demand stimulated by a loan programme supporting the purchase of a first home (“2% Safe Mortgage”), insufficient housing supply in the largest cities and a noticeable appreciation of the Polish zloty against the euro, which raised prices when expressed in the European currency. Poland’s position in the European real estate market is therefore quite specific – it combines rapidly rising prices with a still relatively low price level compared with Western Europe.

AVERAGE HOUSING PRICE GROWTH (2024)

source: author’s own elaboration based on the Deloitte Property Index 

At the city level, the most expensive European capitals turned out to be Luxembourg and Paris, where average prices exceed the threshold of EUR 10 000 per a square metre. In Amsterdam, Inner London and Jerusalem, prices were slightly above EUR 8 000 per a square metre. The cheapest capital included in the study was Ankara, where a square metre of a new apartment can be purchased for approx. EUR 1 000. It should be noted, however, that this result was largely driven by a significant depreciation of the Turkish lira against the euro. Among European capitals, the lowest housing prices were recorded in Bucharest (EUR 1 757/sqm.) and Sarajevo (EUR 1 823/sqm.).

AVERAGE PRICE PER SQUARE METRE OF HOUSING IN EUROPEAN CAPITALS (AND ANKARA AND JERUSALEM)

source: author’s own elaboration based on the Deloitte Property Index

In most cases, capitals are also the most expensive cities on national housing markets. There are, however, exceptions to this rule. The most expensive German city included in the report was Munich, where the average price per square metre reached EUR 10 800 (i.e. by EUR 3 600 more than in Berlin). Housing prices in Barcelona were the highest in Spain (EUR 7 859 per square metre), while the highest average price per square metre in the entire ranking was recorded in Tel Aviv – an impressive EUR 13 970.

In the ranking of annual price growth across the surveyed city markets, a strong Polish accent appears once again. The city with the highest increase in the period analysed was Cracow, where prices rose by more than 28%. Authors of the report attribute this increase to strong demand and simultaneous limited supply, as well as the impact of the programme supporting the purchase of a first home. In Jerusalem, price growth exceeded 25%, driven primarily by high demand. In Albania, rising prices in Tirana and Vlorë result from a major inflow of foreign investors and the development of the tourism sector, which strengthens demand for housing both as an investment and as second homes. Several cities also recorded clear price declines, with the deepest drops observed in Turkey, especially in Izmir and Ankara. This was influenced by high interest rates and reduced credit availability, which weakened domestic buyers’ demand, as well as by changes in the exchange rate of the lira.

Housing affordability across individual cities is also very interesting. The report uses an indicator showing how many average annual salaries are needed to purchase a 70-square-metre apartment. The lowest affordability among the analysed cities was recorded in Amsterdam, where more than fifteen annual salaries were required for this purpose. A similar situation was observed in Athens and Prague. In many other Central European cities like Brno, Košice, Ljubljana or Budapest, buying an apartment requires nine to twelve average annual salaries. This group also includes Warsaw, where purchasing the model apartment would require 9.7 average annual salaries, as well as Wroclaw and Cracow (both at 9.3). The most affordable Polish city included in the report is Katowice, where the model apartment requires 7.1 average annual salaries. Across Europe, the most affordable markets turn out to be Scandinavian and British cities with relatively high wages, such as Odense, Aarhus or Manchester, where purchasing a 70-square-metre apartment requires only five to six annual salaries. The ranking is closed by Turin with a result of 4.9.

The most interesting aspect of the overall picture, however, lies in the conclusions that emerge from data on prices, supply and financing costs. In many countries, housing shortages persist, especially in large cities that attract residents thanks to jobs, education and services. High prices do not deter buyers, but they do change behaviour: the importance of long-term renting is growing, as is institutional rental housing, which in many countries is increasingly seen as an important market segment. Affordability will not improve significantly until construction activity increases and wages begin to rise faster than the cost of living and land prices. Importantly, many countries are introducing regulatory measures: restricting short-term rentals, offering incentives for social housing construction and reforming spatial planning. These actions will not solve all problems, however investments in infrastructure, demographic structure, labour migration and the broader macroeconomic situation also play a major role. Europe’s housing market is therefore a mosaic shaped by a set of historical, economic and cultural conditions. Differences between countries and cities are not a temporary phenomenon, but the result of long-term processes. Although Europe is currently facing similar challenges: housing shortages, rising living costs, and urbanisation pressure, responses to these problems will certainly differ from country to country. Each market will react in line with its structure, history and institutions.

Jerzy Ptaszyński
Research and Market Service Director