What Will Israel'S Continuing Control Mean For The Palestinian Economy?

Samantha Luan

Forex

Political

Economic

India–Palestine conflict

Summary:

Israel is expected to continue to control Palestine’s economy even if peace returns to the territory and the Gaza war ends amid current negotiations, while Palestine needs statehood to make its own decisions, experts have said.“I don't think that what's going on in Gaza or negotiations around the world will bring a lot of effect on Palestinian economy,” Naser Mufrej, professor of finance and economics at the Arab American University in Ramallah told The National.“Israel will continue to employ adverse measures against the economy … continue to follow the same policy, so the economy will not recover, at least in the coming two, three months.”

However, the establishment of a sovereign state will usher in a new phase of economic growth for the territory, with more investments flowing in.“If ceasefire in Gaza opens the path for a just and peaceful solution to the whole struggle, and ends with establishing a sovereign, viable Palestinian state, then this will bring, automatically, what we call appetite for economic, investment, consumption, and that will create optimism, even among donors,” Prof Mufrej said.Raja Khalidi, director general of the Palestine Economic Policy Research Institute, said "a free Palestine would be a very strong player in the region".

“We have models of industrial growth and agricultural development in the West Bank and services, and banking, which regionally are competitive," he added.“This idea of the State of Palestine is now where the discussion should naturally move. The State of Palestine should have been established in 2003. There was a constitution drafted under the previous president, [Yasser] Arafat, by a proper committee."Currently, Israel controls Palestine's economy through restrictions on the movement of goods, labour, and the disbursal of tax revenue. It also sets Palestine’s monetary policy, with Israeli shekel being the main currency in use in the territory.

Israel has been withholding Palestine’s clearance revenue, including tax and customs fees, to restrict the Palestinian Authority’s sources of income since the beginning of the Gaza war.“The status quo in [the occupied] West Bank will continue until a new arrangement takes place,” Firas Melhem, former governor of Palestine Monetary Authority told The National.“This means restrictions will continue and Israel will continue to put pressure on Palestine's economy by withholding Palestine revenue and their ability to pay salaries of public sector employees.”

The comments come as Hamas and Israel hold talks to end the two-year long Gaza war after US President Donald Trump unveiled a detailed plan to redevelop the enclave and set the region on the path for what he promised could be “eternal peace”.The plan includes a “Trump economic development plan” to rebuild Gaza that will be convened by experts “who have helped birth some of the thriving modern miracle cities in the Middle East”.The plan would also establish a special economic zone that would give Gaza preferential tariff and access rates that it can negotiate with other countries.

Gaza’s economy was devastated due to the war that began on October 7, 2023 following Hamas attacks in southern Israel that resulted in about 1,200 deaths, according to Israeli sources. In retaliation, Israel has bombed Gaza relentlessly, killing more than 67,000 civilians and destroying its vital infrastructure.As of early this year, economic activity in Gaza was effectively at a standstill, World Bank said in a recent report.After an 83 per cent year on year contraction last year, Gaza’s GDP fell an additional 12 per cent in the first quarter.

West Bank impact

The West Bank’s economy also bore the brunt of the war as Israel intensified its movement restrictions and imposed widespread closures and launched new military operations in the occupied territory.Palestinian workers were also barred from their workplaces in Israel, denying a vital source of revenue for its people, according to a recent report from the UN Conference on Trade and Development (Unctad).As of February, 849 movement restrictions – including checkpoints, road gates, earth mounds and trenches – continued to restrict the movement of 3.3 million Palestinians across the West Bank, it found.

The most significant of these remains the 712km wall constructed by Israel in the Occupied Palestinian Territory.“The impact of additional Israeli restrictions drove the occupied West Bank’s economy into its most severe contraction in over fifty years,” the Unctad said.“In 2024, the economy shrank by 17 per cent, equivalent to 18.8 per cent decline in gross domestic product per capita, erasing 17 years of development progress, pushing the overall economy back to 2014 levels and GDP per capita back to its 2008 level.”

By January last year, an International Labour Organisation survey revealed that 99 per cent of West Bank businesses had been adversely impacted because of Israeli measures. Over 97 per cent of small and medium-sized enterprises reported declining sales, resulting in permanent job cuts at business establishments.The report also assessed economic costs incurred by the West Bank due to tightened restrictions imposed by Israel in the aftermath of the 2,000 confrontations (Second Intifada) and post-October 2023, combined with the additional constraints in Area C, which is fully controlled by Israel.

Without these constraints, the economy could have generated an additional $170.8 billion in cumulative GDP between 2000 and last year – equivalent to 17 times the West Bank’s GDP last year, according to Unctad analysis.

'Largely symbolic'

World powers including the UK, France, Australia, Portugal and a number of other countries recently announced the formal recognition of Palestine, lifting hopes of an independent state with full powers to control its economy.Experts, however, said the recognition is “largely symbolic” and is not expected to benefit Palestine economically as “sovereignty over land remains the primary missing component of a Palestinian state”, Anas Iqtait, a senior lecturer at the Australian National University, said.

The Palestine Authority’s fiscal autonomy is also limited, putting pressure on its finances, with domestic tax collection accounting for only “about 30 per cent of spending, while the majority of revenue are import taxes collected and transferred by Israel, leaving the PA highly dependent and vulnerable”, Mr Iqtait added.

Source: THENATIONALNEWS

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Adam

Stocks

Economic

OPENING CALL

Stock futures slipped, pointing to a largely lower open Tuesday, after AI-driven tech deals and expectations of Federal Reserve rate cuts pushed shares to record highs Monday.

The continuing shutdown of the federal government has delayed the release of key economic data crucial for the Fed's decision-making.

That said, traders still price in two more interest-rate cuts this year while political jitters in France and risks elsewhere have boosted the dollar.

"The political shifts in Japan and France are creating a ripple effect, increasing fiscal tension globally," Tickmill Group said.

Meanwhile, Trump will meet with his Canadian counterpart Mark Carney later today, with investors likely watching for any developments regarding trade and tariff issues.

The White House was also expected to unveil financial support for farmers who have struggled after China cut down on purchases of agricultural products.

Stocks to Watch

AMD shares rose 3% adding to Monday's gains after the company disclosed a multibillion-dollar partnership with OpenAI.

Constellation Brands shares increased 3% after it had posted smaller declines in sales and profit than had been feared.

Trilogy Metals shares more than doubled after the White House said it would invest in the company

McCormick shares rose by about 1% ahead of the company releasing its third-quarter results.

Watch For:

U.S. trade figures for August were due.

Canada trade data for August are due at 0830ET.

Today's Top Headlines/Must Reads:

- Regional Lenders Are Merging to Answer the Challenge From Megabanks

- One Town's Quest to Find a Loving Home for Its Atom Smasher

- The Cat-Loving Republican in NYC's Mayoral Race Who Just Won't Quit

MARKET WRAPS

Forex:

The dollar

rose against a basket of currencies as political and fiscal concerns outside the U.S. weighed on other developed-market currencies including the euro, sterling and the yen.

The euro

fell against the dollar and faces further potential falls due to political turmoil in France and the absence of fresh U.S. news given the federal government shutdown, ING said.

Bonds:

Treasury yields turned higher after earlier declines but increases remained minimal.

"As for financial markets, the impact [of the shutdown] has been minimal, " says Columbia Threadneedle Investments said. "This is particularly important because the Federal Reserve is currently navigating a very data-dependent environment."

"Whilst we foresee the 10-year U.S. Treasury yield finding its way higher towards 4.5% from a structural perspective, we do think the shutdown will prevent that move from materialising for now," ING said.

Energy:

Oil prices

ticked lower losing ground on yesterday's higher close, as OPEC+'s November supply increase was more modest than expected.

The increase "staved off fears of an even bigger surplus than the one the market is anticipating in coming months," ANZ analysts said, though expectations of an impending glut continued to weigh on sentiment.

Metals:

Gold futures

edged lower but held near a new record as the U.S. government shutdown entered its seventh day with no resolution in sight.

The shutdown has added uncertainty to financial markets. At the same time, political jitters in France and persistent geopolitical risks continued to boost safe-haven demand.

Spot gold prices

edged higher but gold's uptrend shows signs of exhaustion, according to Bank of America, including gold trading roughly 21% above its 200-day simple moving average.

"Trend following/risk management favors raising stops, hedging or reducing some long exposure."

TODAY'S TOP HEADLINES

Shell Sees Trading Boost in Its Integrated Gas Division, Higher Refining Margins

Shell said it expects to report significantly higher third-quarter earnings from trading in its integrated gas division, while a rise in refining margins will provide some offset to weaker oil prices.

The update comes after a second-quarter where adjusted earnings fell nearly 25% due to lower oil prices and weaker earnings from its integrated gas unit, which was hit by volatile prices triggered by geopolitical developments.

Orsted Raises $9.4 Billion to Boost Coffers Amid U.S. Challenges

Orsted raised $9.4 billion through its heavily discounted rights issue, generating new funds to continue its offshore wind-construction projects as the industry faces mounting headwinds.

The capital raise allows the Danish renewable-energy company to shore up its balance sheet after developments in the U.S. wind market disrupted its plans to sell assets.

How AMD Came From Behind to Mount a Challenge in the AI Chip Wars

When Lisa Su took over as chief executive of chip company Advanced Micro Devices in 2014, the company's market value was just under $3 billion.

Today, it is worth more than $330 billion, a more-than-hundredfold increase that reflects how deftly AMD has pivoted from a strategy of mainly producing graphics cards for gaming and personal-computer processors to more tightly focusing on the data-center chips that power the artificial-intelligence revolution.

Big Banks Woo Trump for Roles on Blockbuster IPO

Goldman Sachs Chief David Solomon was at the White House this summer pitching President Trump on why his bank should lead a huge coming deal: the initial public offering of mortgage giants Fannie Mae and Freddie Mac.

Midway through the presentation, Trump invited in a group of athletes from his council on sports and fitness. Solomon continued speaking as former professional wrestler Paul "Triple H" Levesque and golfer Bryson DeChambeau looked on.

Trump Open to Healthcare Talks With Democrats to End Shutdown

WASHINGTON-President Trump signaled a willingness to strike a deal on funding healthcare subsidies demanded by Democrats, putting a spotlight on nascent efforts on Capitol Hill to end the government shutdown.

"We have a negotiation going on right now with the Democrats that could lead to very good things," Trump told reporters in the Oval Office on Monday, just ahead of another set of failed votes on the Senate floor to resolve the standoff. "I'd like to see a deal made for great healthcare, " he said.

Kansas Fed President Schmid Says Rates Are Where They Should Be

At least one Federal Reserve policymaker doesn't see a dire need for lower rates amid rising inflation. Kansas City Fed President Jeff Schmid said on Monday that the central bank's rate policy is only slightly restrictive and that is the right place to be for now.

Schmid views the current level of inflation as too high, contending that the central bank shouldn't lose sight of its goal to bring price growth back to the 2% target.

German Factory Orders Unexpectedly Fall Again Amid Tariff Uncertainty

German manufacturing orders unexpectedly sank for the fourth straight month in August, as tariff uncertainty over the summer damped international orders.

Total orders tumbled 0.8% on month in August, from a 2.7% fall in July, Germany's statistics agency Destatis said Tuesday. Economists polled by The Wall Street Journal instead expected a 1.5% rise.

After Two Years of War, Israel Is Stronger-and More Isolated-Than Ever

Two years after deadly Hamas attacks triggered wars across the Middle East, negotiators are gathering in Egypt to try to end the bloodshed with a hostage deal and an Israeli pullback from the devastated Gaza Strip.

Israel is emerging from the carnage as the regional hegemon with a string of military victories. But the country's fight against Palestinian militant group Hamas also has left it increasingly politically isolated and at risk of losing long-term Western support that has been vital to its survival.

Illinois Sues to Block Trump's National Guard Deployment

CHICAGO-Illinois officials sued Monday to stop President Trump from deploying National Guard forces to Chicago, as the administration's confrontation with Democratic-led states escalated nationwide.

On Saturday, Trump ordered the federalization of 300 Illinois National Guardsmen over the objection of Gov. JB Pritzker, contending that emergency conditions beyond the control of civilian authorities are impeding the enforcement of federal immigration law. The administration over the weekend also ordered the federalization of 400 soldiers of the Texas National Guard for deployment "where needed," including to Chicago and Portland, Ore., another of Trump's targets.

Supreme Court Rejects Ghislaine Maxwell's Appeal

The U.S. Supreme Court on Monday declined to hear an appeal from Ghislaine Maxwell, the Jeffrey Epstein confidante who is currently serving a 20-year sentence for sex trafficking.

The court didn't give a reason for the denial, which leaves intact a federal appeals court ruling that upheld Maxwell's conviction.

Macron's Latest Prime Minister Resigns After a Month in Office

PARIS-French President Emmanuel Macron has lost his fourth prime minister in just over a year, a sign of how the country's political crisis has engulfed his ranks and constrained his options for pulling France out of a fiscal spiral.

On Monday, Sébastien Lecornu stunned the country by resigning as prime minister, a month into the job and one day after he named ministers to his cabinet. Lecornu's benighted tenure-the shortest in the history of France's modern Fifth Republic-is a measure of how a political system that was once a cornerstone of stability in Europe has fallen into disarray.

Source:morningstar

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Stocks

London stocks had edged higher by midday on Tuesday, with Shell and Imperial Brands rising on the back of well-received trading updates, as investors continued to keep an eye on political developments in France.

The FTSE 100 was up 0.2% at 9,494.16.

Kathleen Brooks, research director at XTB, said enthusiasm for stocks was starting to wane after another record-breaking start to the week for Wall Street.

"Earnings reports and lingering concerns about the French political crisis are the key drivers of financial markets today. Upward pressure on French bond yields is easing after President Macron gave the Prime Minister, who resigned on Monday, two days to form a new government," she said.

"However, the spread between French and German 10-year bond yields remains elevated and is at the highest level since December 2024, which suggests that financial markets do not see political stability in France any time soon."

On home shores, the latest data from Halifax showed that house prices ticked lower in September, missing forecasts for a slight rise.

According to latest Halifax house price index, prices decreased by 0.3% in September, compared to a 0.2% uplift in August. It was the first decline since May. Most analysts had been expecting another 0.2% rise.

Year-on-year, house prices rose by 1.3%, the slowest annual rate since April 2024 and down on August’s 2% rise. It was also below forecasts, for a 2.2% increase.

The average property price now stands at £298,184.

However, Amanda Bryden, head of mortgages at Halifax, said the market remained "broadly" stable.

"This slight monthly dip in house prices reflects a housing market that has remained broadly stable; prices are up 0.3% since the start of the year," she said. "While affordability remains a challenge, a relatively lower mortgage rate environment and steady wage growth have helped support buyer confidence.

"Although the broader economic outlook remains uncertain, with the affordability picture gradually improving, we continue to expect modest growth through the remainder of the year."

In equity markets, Rentokil was the standout performer on the FTSE 100 after Bernstein doubled upgraded the shares to ‘outperform’ from ‘underperform’ and hiked the price target to 570p from 313p, saying it sees signs of inflecting organic revenue growth.

The bank also said it believes that Rentokil can enjoy structural growth in line with the industry, combined with ongoing consolidation.

Tobacco giant Imperial Brands was a high riser after saying it remained on track to meet full-year guidance, supported by growth across both its tobacco and next-generation product categories, and announcing a £1.45bn share buyback.

British American Tobacco also gained.

Shell gushed higher after saying it expects "significantly higher" trading in its gas division in the third quarter than in the previous quarter.

Russ Mould, investment director at AJ Bell, said: "Shell’s big bet on natural gas - which is more than a decade in the making - continues to yield positive results.

"In its teaser ahead of third-quarter results, Shell delivered a steady-as-she-goes assessment of trading. While this would not ordinarily be cause for too much excitement, to achieve an outcome broadly in-line with the second quarter despite a material decline in oil prices is a decent outcome.

"It has been driven by a strong showing from its integrated gas business, which encompasses its LNG business where volumes are notably higher quarter-on-quarter.

"Improving margins in its refining business are another bright spot and the renewables arm is expected to break into profit - although not a particularly meaningful one in the context of the wider group.

"Speculation about a potential merger with BP seems to have quietened for now, leaving CEO Wael Sawan to focus on improving the business and looking for ways to improve its valuation to be in line with US counterparts.

"The fear in London is this might eventually involve a shift in its primary stock listing to New York which would be a devastating blow for the UK market."

Marks & Spencer was in the black as JPMorgan placed the shares on ‘positive catalyst watch’ and reiterated its ‘overweight’ recommendation.

Quilter jumped to the top of the FTSE 250 as RBC Capital Markets suggested it could be a potential takeover target for Lloyds.

"UK banks, and particularly LLOY, are under penetrated in wealth management (WM), missing out on relatively high structural growth and returns," RBC said. "In light of narrowing valuation differentials, we think that the imminent introduction of Target Support could act as a catalyst for LLOY to acquire a wealth manager, and we see Quilter as a particularly attractive proposition."

On the downside, discount retailer B&M tumbled after saying it expects full-year profits to fall by up to 18% as it reported a flat underlying sales performance in the UK in the first half.

Broker Peel Hunt, which rates the shares at ‘buy’ with a 400p price target, said: "The shares have been relatively weak, and with this warning, they are likely to remain under pressure for now."

Source: Sharecast

Risk Warnings and Disclaimers

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Michelle

Cryptocurrency

XRP Price Movement Nears Key Resistance

XRP is currently testing a critical resistance level of $3.15 against the US dollar, with ongoing consolidation between the support range of $2.87 and $2.99. As of October 6, 2025, the price movement shows strong upward momentum. Traders are closely monitoring the price action, as breaking the $3.15 resistance could trigger a sharp rally.

$XRP faces a major test at $3.15. A breakout here could trigger a rally to $3.60!

According to cryptocurrency analyst Ali Martinez, if XRP breaks through this resistance, it could pave the way for a potential move toward $3.60. Martinez’s chart analysis indicates that XRP has held strong at its support levels, and the price may soon experience an upward surge. Traders are watching the key $3.15 level for any breakout signals.

Ripple’s Plan to Enhance Institutional Adoption Through Privacy

Ripple’s cryptographer, J. Ayo Akinyele, has revealed a detailed roadmap to enhance the XRP Ledger’s ability to cater to institutional clients. Central to the plan is the introduction of zero-knowledge proofs, which will allow private, compliant transactions while maintaining transparency.

Akinyele explained that confidentiality is essential for financial institutions to adopt blockchain technology. “Institutions are unlikely to use public blockchains without robust privacy features,” he said.

The plan includes two major milestones: enabling private transactions within the next 12 months and launching confidential multi-purpose tokens by 2026. These initiatives aim to make the XRP Ledger more suitable for handling real-world assets and private transactions on a large scale.

This strategic focus on privacy could drive broader institutional adoption of the XRP Ledger, offering a solution to the privacy concerns that currently hinder many enterprises from embracing public blockchains. The development of these features aligns with Ripple’s vision of creating a more secure and efficient financial ecosystem.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Glendon

Cryptocurrency

Bitcoin Drops Below $124,000 Amid Market Downturn

Bitcoin dropped below $124,000, decreasing by 0.80% amid a broader market decline impacting cryptocurrencies like Ethereum and Solana. The drop reflects historical volatility, with major players often sharing insights, although official statements from Bitcoin's decentralized network remain absent.

Bitcoin's value has dropped below $124,000, decreasing by 0.80% in a day, amid a broader cryptocurrency market downturn affecting Ethereum and Solana.

Bitcoin’s Price Decline

Bitcoin’s price decline to below $124,000 reflects a volatile market trend impacting major cryptocurrencies. Ethereum and Solana have also suffered price drops, suggesting a widespread market downturn rather than isolated events.

Market Players and Reactions

Key players include institutional and long-term investors, yet no central authority or founder's response, given Bitcoin’s decentralized nature. Absent official statements, market insights often come from cryptocurrency leaders like CZ Binance, though none directly address this event.

**CZ Binance, CEO of Binance**, - "The current market trends reinforce the need for caution among investors, especially in a volatile market like crypto."

Market reactions include potential funding challenges for projects tied to Bitcoin's value. Broader implications are seen with Ethereum and Solana's price decreases. This ongoing volatility affects market capitalization and trader sentiment.

Past Market Trends

Past events show Bitcoin’s volatile history with periodic price corrections. Current changes align with this pattern, demonstrating the market's susceptibility to frequent fluctuations within its cycle. Community discourse reflects mixed sentiments as market uncertainty persists.

Potential outcomes include continued market impact on investments and liquidity, subject to regulatory discussions. Analysts frequently debate cryptocurrency trends and project valuations based on historical data and market dynamics. Financial implications remain a central focus for investors navigating these turbulent times.

Source: CryptoSlate

Risk Warnings and Disclaimers

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Adam

Stocks

his is a follow-up analysis and timely update of our prior report, “Nikkei 225: Bullish reversal above 45,000, no negative impact from BoJ’s ETF unwind”, published on 23 September 2025.

Price actions of the Japan 225 CFD Index (a proxy of the Nikkei 225 futures) have shaped the expected bullish move. All in all, it rallied by 6.5% to hit a fresh intraday all-time high of 48,668 on Monday, 6 October 2025’s US session from 23 September 2025.

The bullish tone has been reinforced by the weekend election of fiscal and monetary dove Sanae Takaichi as the leader of the LDP ruling party in Japan, and she is likely to become Japan's new prime minister.

Let’s now focus on one key macro factor that can further boost the ongoing major and medium-term uptrend phases of the Nikkei 225.

Further steepening of the JGB yield curve

Fig. 1: JGGs yield curve with Nikkei 225 major trends as of 7 October 2025

The incoming new Japanese premier, Takaichi, a protegée of the late former Prime Minister Shinzo Abe, is considered a pro-fiscal stimulus conservative who is likely to embark on an expansionary fiscal policy to increase Japanese workers’ wages and corporate profits.

Aggressive fiscal expansion is going to be financed by higher Japanese Government Bonds (JGB) issuance, especially via the long-dated JGBs such as the 30-year tenure.

The major bullish breakout (steepening conditions) of the JGB yield curves (both 10-year and 30-year against the 2-year) since June 2022 has a direct correlation with the movements of the Nikkei 225 (see Fig. 1).

The major uptrend phases of the JGB yield curves' steepening remain intact so far, and since Friday, 3 October 2025, the 30-year/2-year JGB yield curve has steepened further by 16 basis points (bps) to 2.38% on Tuesday, 7 October 2025. In addition, the 10-year/2-year JGB yield curve steepened by a lower magnitude of 8 bps to 0.77%.

The continuation of a further steepening of the JGB yield curves is likely to trigger another round of a positive feedback loop in the Nikkei 225.

We shall now turn our attention to the medium-term (1 to 3 weeks) trajectory, key elements, and key levels to watch on the Japan 225 CFD Index from a technical analysis perspective.

Fig. 2: Japan 225 CFD Index medium-term trend as of 7 Oct 2025

Preferred trend bias (1-3 weeks)

Bullish bias with risk of a minor corrective pull-back to cover Monday, 6 October 2025’s gapped up for the Japan 225 CFD Index.

Medium-term pivotal support at 45,930 for the next potential bullish impulsive up move sequence to materialize for the next medium-term resistances to come in at 50,090/50,220 and 51,030/51,220 (Fibonacci extension clusters) (see Fig. 2).

Key elements

The price actions of the Japan 225 CFD Index have continued to oscillate within a medium-term ascending channel since the April 2025 low. The upper boundary of the medium-term ascending channel is projected to act as a resistance zone at 50,090/51,220.

The 45,930 key medium-term pivotal support also confluences closely with the rising 20-day moving average.

The 4-hour RSI momentum indicator of the Japan CFD Index has reached an extreme overbought level of 87.50 on Monday, 6 October 2025. It's highest overbought level in four years since 6 September 2021. These observations highlight an increased risk of an imminent minor corrective pull-back sequence in the price actions of the Japan 225 CFD Index.

Alternative trend bias (1 to 3 weeks)

A break below the 45,930 key medium-term support for the Japan 225 CFD Index put the bulls on the backseat for a deeper corrective pull-back sequence to unfold to expose the next medium-term supports at 44,485 and 43,210 (also the 50-day moving average).

Source: marketpulse

Risk Warnings and Disclaimers

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Samantha Luan

Economic

Forex

House prices in the EU continued to rise in the second quarter of 2025, marking the seventh consecutive year-over-year increase.Nominally, prices increased in all EU countries except Finland, while costs also rose in 21 out of 26 countries when adjusted for inflation.The data shows that while many Europeans are still struggling to get on the housing ladder, affordability concerns are not yet pushing prices down in many areas.But which countries have seen the strongest increases over the past year? And how do these trends compare to long-term changes?

Seven EU countries record over 10% nominal rise

According to Eurostat, house prices in the EU rose by an average of 5.4% year-on-year in the second quarter of 2025. Seven countries recorded increases of more than 10%, with Portugal (17.1%), Bulgaria (15.5%), and Hungary (15.1%) recording the strongest growth.Croatia (13.2%), Spain (12.8%), Slovakia (11.3%) and Czechia (10.5%) also posted double-digit increases.In contrast, Finland was the only country to record a decline, with house prices falling by 1.3% year-on-year in the second quarter of 2025.

In three countries, house prices rose by 1% or less: France (0.5%), Sweden (0.7%), and Cyprus (1%).Among the EU’s other major economies, price increases were more modest and below the EU average. Germany recorded growth of 3.2%, while Italy saw a 3.9% rise.House prices in Turkey have surged in recent years, although data for the most recent period is not yet available. According to the latest data from the fourth quarter of 2024, prices rose by 28.5%, making Turkey the top performer.

Deflated prices surge in Portugal and Bulgaria

Deflated, or real, changes offer a more accurate view of price movements by accounting for consumer price inflation. When adjusted for inflation, EU house prices rose by 2.8% on average.Portugal (14.3%) and Bulgaria (14.1%) recorded the strongest real price growth, both exceeding 14%. Hungary and Spain (9.2% each) and Croatia (8.9%) also saw significant increases, approaching double-digit levels.“Portugal’s surge in real house prices has been driven by strong foreign demand, particularly from digital nomads and expats relocating under tax incentives and residency programs, combined with a persistent housing supply shortage,” Mikk Kalmet from Global Property Guide told Euronews Business.

He noted that limited new construction, especially in Lisbon and coastal regions, has amplified competition for existing properties, pushing prices well above local income growth.According to the Deloitte Property Index 2025, “economic growth, easier access to mortgages, and optimism around Eurozone accession” played a significant role in recent rises in Bulgaria as demand remains robust.House prices declined in five countries in real terms, though the drops were mostly modest. Finland recorded the largest fall at 2.6%, followed by Sweden (1.7%) and Romania (1.2%). In France (0.1%) and Austria (0.3%), the decreases were minimal.

In Italy (1.8%) and Germany (0.7%), the increase was modest, remaining below 2%.

Five-year change in real estate prices

Examining long-term price changes also offers a better picture of how the residential real estate market is evolving.Between the second quarters of 2020 and 2025, real house prices rose the most dramatically in Portugal, up by 40.6%. Portugal stands apart, with all other countries rising by less than 30%.“The influence from the pandemic is still a key driver as increasingly employees and entrepreneurs can operate remotely from anywhere and the Non-Habitual Resident (NHR) tax regime has added to Portugal’s popularity,” Alex Koch de Gooreynd from Knight Frank told Euronews Business.

He emphasised that the traditional market across Portugal has always been led by lifestyle buyers and investors seeking opportunities across all key centres of Porto, Lisbon, Cascais, Comporta and the Algarve.“One new trend has been the increase in demand for the quieter countryside of the Alentejo by both investors and families alike,” he added.

Croatia (29.9%), Hungary (29.4%), Lithuania (28.8%), Bulgaria (25.1%), Estonia (22.5%), and Slovenia (20.3%) also recorded strong real growth, each exceeding 20%.Finland recorded the largest decline over this period, with real house prices down 18%, followed by Romania (–13.7%) and Sweden (–10%).“Finland’s sharp house price decline reflects a combination of weak economic growth, rising unemployment, and the sharp increase in interest rates since 2022, which eroded affordability and froze demand,” said Mikk Kalmet.

He noted that transaction volumes fell to near record lows, while a large stock of unsold new homes placed further pressure on prices, especially in Greater Helsinki.Among the EU’s four largest economies, only Spain (+14%) saw an increase, while prices fell in Germany (–8.5%), France (–6.1%), and Italy (–3%).As for Spain, Croatia, and Greece, Kalmet noted that these markets benefit from international buyers, tourism-linked demand, and relative affordability compared to Northern and Western Europe. However, rising borrowing costs are gradually slowing price growth in some cities.Over the past five years, Turkey has experienced a dramatic surge in house prices. From late 2019 to late 2024, nominal prices increased by 1,175%, while inflation rose by about 500%, according to Eurostat.