Best European cities to buy property

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Europe remains a top destination for property investment with a rich history and culture, varying climates and countries to visit just a short plane away. It also remains one of the world’s most stable regions, with a collective GDP of €15 trillion in 2023. With so many countries and cities to choose from, which is the best European city to buy property? Whilst this is a very subjective question, there are a few popular options (for good reason) that could be just what you are looking for.

Factors to consider when buying property in Europe

Each buyer will have different priorities they are looking for when purchasing property in Europe, from climate to culture and ease of ownership. Below are some key factors to take into consideration:

GDP growth

GDP growth of a country often reflects its economic health and ability to sustain development, directly impacting its real estate market. According to the estimates by Eurostat, the seasonally adjusted GDP for Q3 2024 increased by 0.4% in both the euro area and EU compared to the previous quarter. According to available data for Q3, Ireland registered the highest increase of GDP (3.5%) followed by Spain, Croatia and the Netherlands (all 0.8%). Looking forward to 2025, the Spanish economy is set to grow 2.3%, well above the 1.3% expected for the Euro area (Caixabank)

Unemployment

As of October 2024, the seasonally adjusted unemployment rate in the euro area remained at 6.3%, down 0.3% from October 2023 (European Parliament). Low unemployment often correlates with increased purchasing power and demand for both rental and owner occupied properties.

Spain continues to have the largest unemployment levels at 11.2% in November 2024, however this is down 0.7% on the previous year. Germany has one of the lowest levels at 3.4% and Portugal stands at 6.7% with France at 7.7%.

Interest rates and housing affordability

Interest rates directly influence mortgage affordability and the attractiveness of property markets. The European Central Bank (ECB) raised its benchmark interest rate to 4% in late 2024 to combat inflation. However, interest rates of course vary across countries based on lending practices and economic conditions.

• Germany: Mortgage rates average around 4.5%, making property slightly more expensive but still attractive due to market stability and strong rental demand

• Spain: Mortgage rates are relatively lower, averaging 3.8%, encouraging foreign buyers to invest in regions like Costa Brava and Marbella

• France: Average mortgage rates are 4.2%, with Paris’s high property prices offset by its long-term value appreciation

• Portugal: Benefiting from competitive mortgage rates of around 3.7%, the market remains attractive to international investors taking advantage of tax incentives

• Netherlands: Average rates hover at 4.1%, with Amsterdam’s high rental yields providing a strong return on investment

(European Mortgage Foundation)

Comparison and market dynamics

• Germany: Strong economy and low unemployment, but higher interest rates may temper growth slightly

• Spain: Moderate interest rates and high GDP growth make it ideal for mid- to high-range investors

• France: Paris’s steady appreciation offsets higher costs of borrowing

• Portugal: Low interest rates combined with tax incentives make it a top choice for retirees and expats

• Netherlands: Stability in unemployment and competitive mortgage rates ensure Amsterdam remains a safe investment

Quality of life indices

Many European cities rank highly for quality of life, which increases their appeal to international buyers.

• According to Mercer’s 2024 Quality of Living city ranking, Zurich ranked number 1 followed by Vienna and Geneva in second and third place. Eight out of the top 10 cities are located in western Europe including Amsterdam (6th) and Frankfurt (7th), making it the most appealing region for international assignees

Top European cities to consider buying in:  

Barcelona, Spain

• Average property prices: €4,700/sqm (December 2024 - Idealista)

• Popular neighbourhoods: Eixample, Gràcia and Diagonal Mar

• Rental yields: 5.49% (Global Property Guide) demand for rentals remains strong due to a large expat community and international students matched with a lack of demand

• Key Appeal: A Mediterranean lifestyle, world-class architecture, and its status as a tech and innovation hub make Barcelona a magnet for both investors and residents

Lisbon, Portugal

• Average property prices: €1,619/sqm (Idealista)

• Popular neighbourhoods: Alfama, Príncipe real, Baixa, Bairro Alto

• Rental yields: 4.96% (Global Property Guide, NB this refers to Portugal as a whole as of Q4 2024), supported by high demand for short-term and long-term rentals among digital nomads and retirees

• Key Appeal: Lisbon offers a warm climate, tax benefits under the Non-Habitual Resident (NHR) scheme, and a thriving tech and startup scene

Berlin, Germany

• Average property prices: €5,750/sqm (firstcitiz.com)

• Popular neighbourhoods: Mitte, Neuköll and Friedrichshain-Kreuzberg

• Rental yields: 3.67% (Global Property Guide, NB: this refers to Germany as a whole of Q3 2024)

• Key Appeal: Berlin is a leading hub for technology and startups, attracting young professionals and investors looking for long-term stability

Paris, France

• Average property prices: €9,520/sqm (Global Property Guide)

• Popular neighbourhoods: Le Marais, Saint-Germain-des-Prés and Montmartre

• Rental yields: 4.70% (Global Property Guide, NB this refers to France as a whole Q4, 2024)

• Key Appeal: Paris combines cultural richness with economic strength. Its consistent ranking among the world’s most livable cities enhances its desirability for investors

Milan, Italy

• Average property prices: €5,328/sqm (Statista)

• Popular neighbourhoods: Citylife, Brera and Porta Venezia

• Rental yields: 7.04% (Global Property Guide, NB this refers to Italy as a whole Q3 2024

• Key Appeal: As a global hub for fashion, design, and finance, Milan attracts high-net-worth individuals and businesses.

Emerging markets to watch

• Budapest, Hungary: Affordable pricing and growth potential.

• Warsaw, Poland: Rising as a business hub.

• Valencia, Spain: Affordable coastal alternative to Barcelona.

Conclusion

Europe’s diverse property markets offer opportunities for all types of investors, whether you’re drawn to Barcelona’s charm, Lisbon’s tax benefits, or Paris's shopping. With strong economic indicators and high-quality living standards, these cities combine lifestyle appeal with solid investment potential.