Prime residential property markets across Europe continued their upward trajectory in 2025, with prices rising in more than half of the cities tracked by Knight Frank’s Wealth Report 2026. Yet the performance across regions remained uneven, with Prague emerging as Europe’s strongest market while London recorded the steepest fall.
Prime property, typically defined as the top 5% of housing by value in any given location, is increasingly shaped by international buyers and global wealth flows. Across 47 European cities included in the index, many recorded annual growth above 3%, reflecting sustained demand despite economic uncertainty and higher borrowing costs.
Prague led the European rankings with a 14.6% rise in prime property prices. Strong gains were also seen in resort and lifestyle destinations, including Méribel in France, Porto in Portugal and Marbella in Spain, all posting increases above 8%. Other notable performers included Courchevel 1850, Florence, Lake Como, Gstaad, Rome and Quinta do Lago, where annual growth ranged between 5% and 7%.
The report highlights a clear pattern across Europe. Alpine ski resorts, Mediterranean coastal destinations and culturally rich cities have become the primary drivers of luxury property demand.
By contrast, London recorded the largest decline in Europe, with prime prices falling 4.7% in 2025. Analysts attribute the drop to shifting tax policies affecting wealthy residents, prompting some buyers to reconsider ownership in favour of renting. Smaller declines were also recorded in Ibiza, Jersey and Lausanne.
Other major capitals showed mixed results. Madrid, Oslo and Berlin posted moderate gains, while Lisbon, Dublin, Vienna, Paris and Bucharest experienced slower but still positive growth. Stockholm saw a slight decline, and Edinburgh remained stable.
At the global level, Tokyo stood out with a dramatic 58.5% surge in prime property prices, driven by limited supply, low interest rates and strong regional demand. Dubai followed with a 25.1% increase, while Manila and Seoul also recorded double-digit growth. Prague ranked as Europe’s strongest performer globally.
In contrast, several Chinese cities experienced significant downturns. Guangzhou led global declines with a 12.2% fall, followed by Shenzhen, Shanghai and Beijing. Toronto and Vancouver in Canada also recorded notable decreases.
According to Knight Frank’s Wealth Report editor Liam Bailey, prime residential markets are increasingly diverging from broader housing trends. He noted that rapid wealth creation continues to support luxury demand even as mainstream property markets face economic pressures.
Across the European Union, overall house prices rose 5.5% in the final quarter of 2025, with tourism-heavy markets such as Portugal, Croatia and Spain outperforming the average. The data suggests a growing divide between lifestyle-driven luxury markets and traditional financial hubs, where growth is slowing or reversing.
