Finding an affordable and decent place to live has become increasingly difficult across Europe. Housing accounts for one-fifth of the average EU household’s income. This share is significantly higher in some countries, reaching 35% in Greece according to Eurostat.
Rising rents are a significant burden for Europeans. In 2025, rents increased by 3.1% in the EU. In some countries, rent inflation reached double digits.
Demand rising faster than supply
“The key dynamic is straightforward: demand has been rising faster than supply,” Kate Everett-Allen, head of European residential research at Knight Frank told Euronews Business.
“Affordability pressures in the sales market — particularly with mortgage rates still relatively high — have pushed more households into renting, especially first-time buyers.”
So, which countries saw the biggest rent increases in 2025? What were the main drivers of rent prices in 2025?
Within the EU, the average rate of change for actual rentals for housing ranged from 1% in Finland to 17.6% in Croatia.
Rent inflation is also high in Greece (10%), Hungary (9.8%) Bulgaria (9.6%) and Romania (8.2%), all above 8%.
Kate Everett-Allen pointed out that supply has also come under pressure. Tax and regulatory changes have reduced landlord appetite in some markets, while energy efficiency requirements and retrofit costs are increasing the burden of holding rental stock.
Restrictions on short-term lets are helping at the margins, but not enough to materially shift overall supply. “The result is a tighter rental market and continued upward pressure on rents,” she said.
Three major economies below EU average
In addition to Finland (1%), annual rent inflation is below the EU average in Luxembourg (1.6%), Malta (1.7%), Slovenia (1.9%), Germany (2.1%), Denmark (2.2%), France (2.3%) and Spain (2.4%).
This shows that rents increased below the EU average in three major European economies. Among the EU’s Big Four economies, Italy (3.8%) is the only country where rent inflation exceeded the EU but it is less than one point.
Czechia (6.1%), Latvia (5.7%), Lithuania (5.6%), Portugal (5.3%), Sweden (5.3%), the Netherlands (5.1%) and Slovakia (5.1%) are other countries where rent rises were above 5%.
Rising costs for landlords
“Rent increases in 2025 were driven by strong demand, as higher house prices pushed more households into the rental market,” Mikk Kalmet from Global Property Guide told Euronews Business.
“Rising costs for landlords, especially ones who are heavily leveraged were gradually passed on to tenants — which drove up the rent prices further.”
He also noted that countries with less regulated rental markets and tighter supply have generally seen stronger increases. In contrast, countries with rent controls or already high rent levels tend to experience slower growth.
Turkey a clear outlier
When EU candidates and EFTA countries are included, Turkey stands out as a clear outlier with annual rent inflation of 77.6% among 36 countries. The second-highest increase was in Montenegro at 18.5% indicating how far Turkey is ahead of the others.
“Inflation is exceptionally high [in Turkey] meaning inflation accounts for a large proportion of the headline nominal rental growth,” Everett-Allen said.
She emphasised that homeownership has become increasingly unaffordable in Turkey.
Rapid house price inflation, high mortgage rates and limited availability of long‑term fixed‑rate financing have effectively locked many households out of buying, pushing more demand into renting.
Turkey: Rent controls backfire, driving up rents
The Turkish government capped rent increases at 25% in July 2022, which was then extended to July 2024.
“Rent controls have had unintended effects,” Everett-Allen said. She noted that annual rent increases were capped well below inflation for sitting tenants, which led landlords to try to recover losses through sharp increases on new lets, pushing headline market rents sharply higher.
“Housing is often used as a hedge against inflation and currency depreciation, pushing both prices and rents higher,” Kalmet said.
The net minimum wage in Turkey rose by 27% in 2026 compared to 2025. Almost two in five workers receive the minimum wage.
In general, rents rose significantly more in Eastern Europe and the Balkans than in other regions while Kosovo (1%) and North Macedonia (3.3%) were exceptions.
Mikk Kalmet stated that Montenegro and Croatia are also showing strong growth, mainly because they are attractive short-and long term rental destinations, especially compared to some historically long-established markets such as Spain and South of France.
The ratio between net salaries and rents in European city centres varies widely. Euronews Business has previously covered the best and worst rent-to-salary ratios across Europe.