Europe´s sunny regions lead growth in Real Estate prices
- Portugal Business News - Valerie Charoux
- 6 hours ago
- 3 min read
Real Estate News Europe - Europe´s sunny regions lead growth in Real Estate prices. Here are the Top regions in Europe with the highest growth of residential Real Estate prices in 2026, the forecast for residential real estate prices in Europe´s prime locations, as well as the source countries of buyers that are driving demand for Residential Real Estate in Europe, according to the report European Residential Signals published by Knight Frank in July 2026:
Europe´s sunny regions lead growth in Residential Real Estate prices:
Europe´s sunny regions have led to a sharp growth in Residential Real Estate prices over the past five years, led by strong international demand for prime locations, such as the Algarve where residential real estate prices rose by over 60% - as shown in the chart below:
Here are the Top regions in Europe with the highest growth of residential Real Estate prices:
1 - The Algarve, Portugal
Prime Residential Real Estate prices in the Algarve, Portugal, have grown by over 60% between 2020 and 2025.
2 - Provence, France
Prime Residential Real Estate prices in Provence, France, have grown by nearly 50% between 2020 and 2025.
3 - Marbella, Spain
Prime Residential Real Estate prices in Marbella, Spain, have grown by nearly 40% between 2020 and 2025.
What is the forecast for Residential Real Estate prices in Europe´s prime locations?
The forecast for residential real estate prices in Europe´s prime locations is a continued upward pressure on property prices across much of Europe, according to Oxford Economics.
Residential Real Estate price growth forecast in Portugal:
Residential Real Estate prices in Portugal are expected to grow by 10% in 2026 and the price growth is expected to ease to 3% in 2027.
However, the growth in real estate prices is determined by the currency used by the buyer. Price growth of real estate in Lisbon, that is 21% in euros between 2020 and 2025, looks considerably different when viewed through the lens of foreign currencies, particularly for buyers benefiting from stronger exchange rates such as the pound sterling.
Residential Real Estate price growth forecast in Spain:
Residential Real Estate prices in Spain are expected to grow by 11% in 2026 and the price growth is expected to ease to 5% in 2027.
Residential Real Estate price growth forecast in Germany:
Residential Real Estate prices in Germany are expected to grow by 5% in 2026 and the price growth is expected to ease to 2% in 2027.
Residential Real Estate price growth forecast in France:
Residential Real Estate prices in France are expected to grow by 4% in 2026 and the price growth is expected to ease to 1% in 2027.
What are the source countries of buyers that are driving demand in Residential Real Estate in Europe?
1 - United Kingdom
The UK is the No. 1 source country for buyers of residential real estate in Europe as they account for a third of demand for the first six months of 2026.
UK buyers are also broadening their footprint across Europe’s prime real estate markets, expanding their presence in Madrid, Ibiza and Tuscany, while maintaining leading positions across multiple markets including Monaco and the French Riviera.
As of mid 2026, the pound sterling retains a relative advantage, with £1 buying around €1.15. A stronger pound relative to the euro enhances purchasing power across euro-denominated markets, helping sustain demand for European property, with UK buyers particular focused on lifestyle markets such as the Algarve, Marbella and the Balearics.
As an example of the influence of a stronger currency on the growth of Residential Real Estate prices, we see that in Milan house prices are up by around 36% for a euro-based buyer between 2020 and 2025. However, once currency effects are considered, the increase in real estate prices in Milan is lower for international buyers, namely a growth of 32% for UK buyers, of 31% for US buyers, and of just 17% for Swiss buyers.
2 - United States
The US is the 2nd source country for buyers of residential real estate in Europe as they account for over 15% of demand for the first six months of 2026.
US buyers are expanding their footprint across key lifestyle and urban destinations, gaining ground in markets such as Milan, Ibiza and the Algarve.
The recent weakening of the US dollar against the euro has marginally reduced purchasing power compared with recent peaks, although US demand remains robust, supported by strong wealth creation and diversification into European assets.
