Where Housing Prices Will Rise the Most in 2025

Construction is failing to keep up with growing demand in most countries, leading to price increases almost everywhere except China and France. According to Fitch Ratings, global housing prices are projected to rise by 1% to 3% over the next two years. Contributing factors include rising real wages, low unemployment rates, and decreasing inflation.

Top Markets for Price Growth

The most significant housing price increases in 2025 are expected in the Netherlands, Canada, Brazil, and Mexico. In the Netherlands and Canada, government programs supporting first-time buyers will drive growth, while wage increases and higher construction costs will boost prices in Brazil and Mexico.

Netherlands

Housing price growth in the Netherlands is forecast to slow from 13% in 2024 to 8–10% in 2025 and 6–8% in 2026. Despite this deceleration, the country will remain among the global leaders in price increases, largely due to a shortage of affordable homes. Rising material and labor costs further limit supply.

The secondary housing market in the Netherlands has seen record growth, with prices for owner-occupied homes in October 2024 averaging 11.5% higher than in the same month in 2023. Month-over-month, prices rose by 0.8%, according to official data.

Spain

Housing prices in Spain are expected to increase by 4–6% in 2025 and 5–7% in 2026, driven by rising consumer confidence, lower interest rates, and reduced inflation. However, new construction is insufficient to meet demand, with new homes covering only half of the needs of new households.

Germany

German housing prices are forecast to rise by 2–4% over the next two years, surpassing Fitch’s earlier 1.5% growth projection for 2024. Key drivers include rising rental rates and moderate wage growth. However, JLL reports that real estate transaction volumes in Germany fell below expectations in 2024, reaching €35 billion—about 10% higher than in 2023 but significantly below the initially forecast €40 billion. Analysts anticipate transaction volumes in 2025 to reach €40–42 billion.

United Kingdom

Fitch projects moderate housing price growth in the UK, with prices increasing by 2–4% in 2025 and 2026, supported by lower mortgage rates. Lenders have already priced in a potential rate increase to 3.5% in 2025. Other factors include a strong labor market and rising nominal incomes.

Hamptons forecasts 3% growth nationwide and 4% in London in 2025. However, projections for 2026 have been revised downward from 5% to 3.5%, following the Labour government’s budget announcement. Long-term risks include higher employer contributions to national insurance and increased stamp duty on second homes.

Other Countries

Denmark. Lower interest rates and moderate growth in disposable incomes are expected to drive prices up by 2–4%.
Italy. Prices may rise by 0.5–2.5% over the next two years, though demand is constrained by high mortgage rates.
Georgia. According to Statista, Georgia’s real estate market will grow at an average rate of 5.69% annually until 2029, the highest growth among many countries. The market is bolstered by a favorable investment climate and a booming tourism sector.
Market Challenges in China and France
China. The Chinese government continues to struggle with an economic and housing crisis, leading to declining property prices. Despite attempts to stabilize the market, prices remain under pressure due to weak demand.
France. In France, housing prices are expected to decline due to high living costs and political uncertainty. However, the pace of decline is projected to slow, with potential recovery beginning in 2026. Moody’s downgraded France’s credit rating from Aa2 (stable) to Aa3 (negative), citing budget deficits and rising government debt levels, which could reach 120% of GDP by 2027.

Broader Market Trends

Fitch Ratings predicts that supply will remain constrained across most countries due to high land, labor, and material costs, as well as tight credit conditions for smaller developers. However, demand is supported by lower mortgage rates, stable unemployment levels, rising household incomes, and the formation of new households.

Energy-efficient homes are expected to see increased demand due to high utility costs. Some European banks have begun offering differentiated mortgage rates based on a property’s energy efficiency certification.

Risks and Opportunities

Fitch notes that housing price growth could exceed expectations if economic conditions and household incomes improve or if central banks implement more aggressive rate cuts. Conversely, higher unemployment, declining real incomes, or a resurgence of inflation could dampen demand. Additional costs, such as increased property taxes and higher insurance premiums, may further deter buyers.

As markets navigate these challenges, energy-efficient and affordable housing are likely to remain key drivers of demand in the coming years.