CEE house prices outpace the EU

On the radar

• Serbia will publish September inflation today at noon CET.
• In the morning, Romania will release trade data and wage growth (8 AM CET).

Economic developments

Today we look at the house prices development in the EU27 and CEE7 and we see that the cumulative rise of house prices has been substantially stronger in CEE region over last decade. With 2015 set at 100, the house price index for CEE7 reached roughly 250 in 1H26, compared with around 165 for the EU27. This means that residential property prices have increased by about 150% in CEE since 2015, versus roughly 65% in the EU overall. The divergence became particularly pronounced after 2020, supported by strong nominal wage growth, initially very low interest rates and robust household demand. Looking at the growth dynamics, CEE7 average growth of house prices was double-digit in the first half of the year (slightly above 10%) compared with roughly 5% in the whole EU27. In all CEE countries growth of house prices was close to 10%. Only in Poland it was somehow weaker as in 2Q26 house prices increased by 6.3% y/y. We see however, that growth dynamics ended to accelerate recently reflecting challenging situation for households amid rising inflation and relatively high interest rate costs.

Market movements

This week, the focus will shift to the U.S. inflation data for September. With yields on 10-year U.S. Treasury bonds having recently stabilized, the release could provide fresh momentum. If inflation comes in higher than expected, markets are likely to revise their interest rate expectations upward. Locally, we have seen long-term yields falling over last week, while CEE currencies remained overall relatively week against the euro. In Czechia, on Friday and Saturday, voters elected local councils and took part in the first round of elections to one-third of the Senate. Independent candidates and local groups once again dominated the municipal elections. From a national political perspective, however, the most relevant results come from the larger cities. While ANO remained competitive and performed strongly in several regional centers, including Ostrava, Olomouc and Plzen, it recorded weaker results in some major cities and failed to replicate its strongest performances from previous elections. In the Senate elections, several opposition candidates secured election already in the first round. ANO once again failed to make a breakthrough, and the Senate will remain firmly under opposition control even after the election. In Croatia, government presented update to 2026 budget. While the budget gap target has been affirmed at 2.9% of GDP, while update itself can be considered as rebalancing exercise, adding more support and rigidity to households and core public sector items. We expect budget rebalance to remain largely under the radar, on the financing side securities issuance has been affirmed at largely unchanged at EUR 4.5bn (+EUR95mn).

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