Which European countries are hit the hardest by annual rent inflation and why?
Rent prices have risen significantly across Europe, and in particular in Romania and Croatia in recent periods. Euronews Business takes a closer look at annual rent inflation with a focus on these two countries.
Rents continue to rise across Europe, and some countries are particularly affected.
In many European nations, rent increases are outpacing overall inflation, and households in Romania and Croatia have been hit especially hard by recent rent increases.
So, what factors are driving the recent rise in rents, and why do Romania and Croatia stand out as outliers within the EU?
Between the second quarters of 2025 and 2026, actual rental payments for housing rose by 3% in the EU. Rent inflation ranged from zero in Finland to 43.5% in Romania, closely followed by Croatia at 40.1%, according to Eurostat.
Overall inflation was 9.5% in Romania and 4.8% in Croatia over the same period. After adjusting for inflation, rents rose by more than 30% in both countries.
Slovenia had the EU’s third-highest rent increase, at 10%, or just over 6% after adjusting for inflation.
Impact of public housing
Eurostat data providers in these countries explained to Euronews Business the reasons behind these increases, pointing to the role of public housing.
The main driver in Romania is "the increase of the administered rent [rent for housing belonging to the public or private domain of the state or administrative territorial units]" according to the government.
However, Dr Adriana M. Soaita from the University of Glasgow doubts this explanation for Romania.
"Public rental housing is too insignificant as a share of the housing stock,” she told Euronews Business, noting that its rents are so much lower than those in the private sector that even tripling them would have little impact on the overall average.
"If we still notice high increases in rents after adjusting for inflation, Eurostat methodology and the informal sector, these may be driven by new builds or fully renovated properties entering the market,” Soaita said.
In Croatia, the sharp increase is “caused by local authorities' decision in the capital city of Zagreb to increase rental prices for category of social rents”, according to the institution providing the data.
Investment properties reshape rents in Croatia
Prof. Gojko Bezovan from the University of Zagreb noted that a significant portion of Croatia's housing stock has become financialised, with investments in apartments and tourism-oriented real estate emerging as the dominant form of savings.
Therefore, a substantial share of apartments in new developments are not purchased for housing, and they frequently remain vacant.
He emphasised that a tax on vacant apartments was introduced in Croatia starting in 2025. Throughout 2025 and 2026, there was a significant increase in the number of residential rent contracts registered with the Tax Administration.
“Therefore, a larger number of higher-quality housing units in major cities entered the rental market, with rental rates significantly exceeding the average,” he told Euronews Business.
Turkey leads in rent inflation
When EU candidates and EFTA countries are included, Turkey has the highest rent inflation. It is 49.6% year on year between the second quarters of 2025 and 2026.
However, unlike Romania and Croatia, Turkey did not see a sudden sharp rise. Instead, rents have been increasing gradually. Overall inflation was also above 30% over the same period, meaning the real increase in rents was lower than in those two countries.
Rents also rose by double digits in Serbia, increasing by 12.5%. The increase was also above 5% in Bulgaria (9.9%), North Macedonia (9.2%), Iceland (8.6%), Greece (7.5%), Czechia (6.2%), Albania (6%), Slovakia (5.3%), Lithuania (5.3%) and Portugal (5.2%).
Decline in real terms in major economies
Among the EU’s Big Four economies, only Italy, at 3.5%, was above the EU average of 3%. Rent inflation was 2.5% in Spain, 2.1% in Germany and 1.6% in France.
As in the three countries above, rents did not rise in real terms in Belgium, Estonia, Finland and Luxembourg, when inflation is taken into account.
Rents rose by 2.9% in the EU between August 2025 and August 2026. In general, this shows a similar trend to the change between the second quarters of those years, except for Croatia, where the annual increase in August was much lower, at 4.3%.
This is because the index jumped sharply between July and August 2025, affecting both the monthly and quarterly changes.
Strong competition for scarce rental housing
Emma Rosser, EMEA living research director at JLL, noted that they are not seeing strong hikes in the overall Eurostat figures for all lets, but it does seem growth is still elevated and accelerating on new lettings – which could be indicative of future pains across the market.
“Strong competition for scarce rental housing in European cities is driving elevated price growth for new tenancies,” she told Euronews Business.
She added that the supply-demand imbalance trend is true across Europe but more intense in those cities with the highest rental growth.
Dr Nóra Teller, researcher at the Budapest-based Metropolitan Research Institute, said that the factors driving rent increases include economic factors, demographic factors, and supply-side constraints.
“Extended periods of low interest rates fuelled property borrowing until a few years ago, but then in 2022 the costs of borrowing dramatically increased, which pushed out first-time buyers to the private rented sector,” she told Euronews Business.
She also pointed out that financialisation has been driving prices up: institutional investors, private equity funds, real estate investment trusts, and buy-to-let owners increasingly treat housing as a financial asset rather than a social good.
