House prices are rising across Europe. Luxury homes are no exception. Prime property prices are on the move in European cities. In more than half of the roughly 50 cities tracked by Knight Frank’s Wealth Report 2026, annual price growth exceeded 3% in 2025.

So, which cities are driving the surge in prime property prices across Europe? And how do European luxury markets compare with the rest of the world?

Prime properties are the most desirable and most expensive property in a given location. It is generally defined as the top 5% of each market by value. Prime markets often have a significant international bias in terms of buyer profile.

Prague saw the highest increase

Knight Frank’s Prime International Residential Index tracks 100 cities worldwide, 47 of them in Europe. Prague, the capital of Czechia, recorded the strongest growth among European cities, with prices rising 14.6% in 2025.

France’s Méribel (9%), Portugal’s Porto (8.5%) and Spain’s Marbella (8.1%) also saw strong gains, each posting rises above 8%.

Another French ski resort, Courchevel 1850, also saw a strong rise of 6.9%.

Italy’s Florence and Lake Como recorded increases of 6.7% and 6.5% respectively.

Switzerland’s Gstaad (5.5%), Italy’s Rome (5.5%) and Portugal’s Quinta do Lago (5.2%) all posted rises above 5%.

The top 10 European cities in the index share a common thread: Alpine ski resorts, Portuguese golf retreats and romantic cultural cities dominate the list.

London saw the highest decline in Europe

Not all European cities saw gains. London recorded the steepest decline, with prime property prices falling 4.7% in 2025.

“London is evolving as shifts in tax rules on wealthy residents push budgets lower and encourage some to consider renting rather than buying,” the report said.

Ibiza, Jersey and Lausanne also saw modest drops of between 1% and 2%.

Among other European capitals, Madrid (5%), Oslo (4.2%) and Berlin (3.4%) posted solid gains. Growth was more modest in Lisbon (2.7%), Dublin (2.3%), Vienna (1.3%), Paris (1.3%) and Bucharest (0.4%). Stockholm saw a slight decline of 0.7%, while prices in Edinburgh remained flat.

Lifestyle and resort destinations winners

Lifestyle and resort destinations are the clear winners in Europe. Alpine ski resorts and Mediterranean sun destinations dominate the top of the rankings. Italian cities also stand out as a group.

Major financial capitals tell a different story. London, Stockholm, Paris and Milan are all lagging well behind resort markets.

Tokyo is global outlier

Tokyo stands out as the global outlier. Prime property prices in Japan’s capital surged 58.5% in 2025. The report noted that Tokyo’s new-build apartment market has been boosted by scarcity, low interest rates and strong inward demand from Asia-Pacific.

Dubai ranked second with a 25.1% rise — though the data predates the US-Israel strike on Iran and Tehran’s subsequent response to Gulf countries.

Manila and Seoul also featured in the top five, each posting rises of around 15-20%.

Prague rounds out the top five, making it the highest-ranked European city globally.

“In many markets, prime residential property has pulled away from the broader housing sector, underpinned by the strength of wealth creation,” Liam Bailey, editor of The Wealth Report, said.

“While mainstream markets remain exposed to wider economic pressures, the pace at which wealth is being generated is helping to keep demand for luxury property more resilient, even against recent volatility in debt costs.”

Biggest lost in China and Canada

China’s Guangzhou recorded the largest decline, with prime property prices falling 12.2%. Shenzhen (7.2%), Shanghai (5%) and Beijing (4.9%) also feature among the steepest global falls, pointing to a broad slowdown across Chinese cities.

Canada’s Toronto and Vancouver each saw declines of around 7%.

EU house prices rose 5.5% annually in the final quarter of 2025, with tourist-friendly markets like Portugal, Croatia and Spain recording even stronger gains according to Eurostat.