Tailwinds or tailspins? Europe in 2026

After eight ECB rate cuts, housing markets are stirring back to life as liquidity and sentiment improve, with prime residential assets outperforming. Europe now claims eight of the top ten spots in our Global House Price Index. 

Meanwhile, in commercial property, the favourable rate environment and the region’s relative stability mean Europe remains the leading destination for international investment, attracting a diverse pool of global capital. Private capital has long been a key driver of demand, but as some sectors have undergone repricing and debt costs have eased, liquidity is broadening further.

Across sectors, those supported by strong structural tailwinds such as living and logistics continue to attract investor interest, albeit with nuance across individual markets. Sectors positioned to benefit from innovation and rising defence expenditure are also seeing increased attention, particularly in strategically important locations.

Recovery, however, remains uneven. Residential buyer demand is strongest in Spain and Portugal - both forecast by the IMF to grow around 2% in 2026. Stockholm leads our 2026 Prime Residential Forecast, followed by Madrid, Lisbon and Dublin, supported by strong employment and constrained supply. This diversity is Europe’s strength. 

Across the bloc, investor confidence is rebuilding as global instability drives capital towards Europe’s relative safety and transparency. Infrastructure investment and lower borrowing costs should sustain modest momentum, even with GDP near 1%. 

With key elections in Hungary and Sweden in 2026 and ongoing fiscal reform debates across the region, policy direction will remain a key market differentiator.