Spanish real estate market: trends, prices, and outlook for 2026

The Spanish residential real estate market continues to grow in 2025 and is expected to maintain a positive trajectory in 2026. This development is part of a generally favorable macroeconomic context and is mainly based on a persistent imbalance between housing supply and rapidly growing demand. Several economic, demographic, and financial factors contribute to explaining this structural trend.

A sharp rise in prices and transactions

In 2025, housing prices in Spain rose by 13.1%, the sharpest increase since 2006. The average price now stands at €2,091 per square meter, reflecting growing pressure on the residential market. At the same time, the volume of real estate transactions remains particularly high. The market closed 2025 with around 700,000 sales, a level close to the historic peak observed before the 2008 financial crisis.

This increase can be explained mainly by three structural factors:

• sustained population growth, generating approximately 180,000 new households each year;
• insufficient supply of new housing, limited to 100,000 to 130,000 units per year;
• a favorable economic climate, characterized by job creation and rising incomes.

As a result, demand continues to far exceed the country's construction capacity, fueling price increases.

A favorable macroeconomic environment

The Spanish economy also helped to sustain the momentum of the real estate market. In 2025, GDP growth reached 2.8%, driven mainly by domestic demand. Inflation, which had risen sharply between 2021 and 2022, stabilized at around 3%, while the unemployment rate fell to 9.93%, its lowest level in several years.

European monetary policy also plays a decisive role. After a period of increases to curb inflation, the European Central Bank lowered its key interest rates, leading to a fall in the Euribor and therefore in the cost of mortgage loans. This development facilitates access to financing and supports activity in the sector.

The outlook for 2026 remains positive: economic growth is expected to be between 2.2% and 2.4%, inflation is expected to continue to slow, and unemployment is expected to remain around 10%.

Strong demand, healthier than before 2008

Unlike the real estate cycle of the 2000s, current demand appears to be more solid and sustainable. Households now have healthier financial statements thanks to several structural changes.

Firstly, household debt levels are significantly lower than before the 2008 crisis. Furthermore, savings accumulated during the Covid-19 pandemic have strengthened their capacity to invest in real estate.

Acquisition methods have also changed. Around 50% of transactions are now completed without a mortgage, whereas previously the majority of purchases were financed by credit. Furthermore, when households do take out a loan, it is now mostly at a fixed rate (60% of loans), with an average rate of around 3%. Finally, the average loan-to-value ratio is around 65%, far below the levels above 100% seen before the financial crisis.

These developments reflect a more balanced market that is less exposed to the risks of excessive debt.

A structural housing shortage

Despite positive market signals, one of the main challenges facing the sector remains the housing shortage. The pace of construction remains insufficient to meet growing demand linked to demographics and immigration.

In 2025, Spain's population reached approximately 49.4 million and is expected to exceed 50 million in 2026. This growth, largely fueled by migration, is leading to the formation of approximately 180,000 new households per year.

However, annual production of new housing remains well below this level. Since 2022, the gap between new households and building permits has generated a cumulative deficit of more than 200,000 homes. Taking into account other factors—such as the conversion of homes into tourist rentals or purchases by foreign investors—some estimates put this total deficit at between 600,000 and 700,000 homes.

Several obstacles limit the increase in supply:

• the administrative delays in granting building permits;
• the increase in the cost of materials;
• the labor shortage in the construction industry;
• financing difficulties for real estate developers.

Stable growth prospects for 2026

For 2026, experts anticipate continued growth in the real estate market, but at a more moderate pace. Price increases are expected to gradually stabilize, particularly in certain areas where current levels are already high relative to household incomes.

However, as long as population growth remains strong and housing supply cannot keep pace with demand, pressure on prices is likely to persist, particularly in large cities and coastal areas.

In summary, the real estate market

The Spanish residential real estate market continues to grow in 2025 and is expected to maintain a positive trajectory in 2026. This development is part of a generally favorable macroeconomic context and is mainly based on a persistent imbalance between housing supply and rapidly growing demand. Several economic, demographic, and financial factors contribute to explaining this structural trend.

A sharp rise in prices and transactions

In 2025, housing prices in Spain rose by 13.1%, the sharpest increase since 2006. The average price now stands at €2,091 per square meter, reflecting growing pressure on the residential market. At the same time, the volume of real estate transactions remains particularly high. The market closed 2025 with around 700,000 sales, a level close to the historic peak observed before the 2008 financial crisis.

This increase can be explained mainly by three structural factors:

• sustained population growth, generating approximately 180,000 new households each year;
• insufficient supply of new housing, limited to 100,000 to 130,000 units per year;
• a favorable economic climate, characterized by job creation and rising incomes.

As a result, demand continues to far exceed the country's construction capacity, fueling price increases.

A favorable macroeconomic environment

The Spanish economy also helped to sustain the momentum of the real estate market. In 2025, GDP growth reached 2.8%, driven mainly by domestic demand. Inflation, which had risen sharply between 2021 and 2022, stabilized at around 3%, while the unemployment rate fell to 9.93%, its lowest level in several years.

European monetary policy also plays a decisive role. After a period of increases to curb inflation, the European Central Bank lowered its key interest rates, leading to a fall in the Euribor and therefore in the cost of mortgage loans. This development facilitates access to financing and supports activity in the sector.

The outlook for 2026 remains positive: economic growth is expected to be between 2.2% and 2.4%, inflation is expected to continue to slow, and unemployment is expected to remain around 10%.

Strong demand, healthier than before 2008

Unlike the real estate cycle of the 2000s, current demand appears to be more solid and sustainable. Households now have healthier financial statements thanks to several structural changes.

Firstly, household debt levels are significantly lower than before the 2008 crisis. Furthermore, savings accumulated during the Covid-19 pandemic have strengthened their capacity to invest in real estate.

Acquisition methods have also changed. Around 50% of transactions are now completed without a mortgage, whereas previously the majority of purchases were financed by credit. Furthermore, when households do take out a loan, it is now mostly at a fixed rate (60% of loans), with an average rate of around 3%. Finally, the average loan-to-value ratio is around 65%, far below the levels above 100% seen before the financial crisis.

These developments reflect a more balanced market that is less exposed to the risks of excessive debt.

A structural housing shortage

Despite positive market signals, one of the main challenges facing the sector remains the housing shortage. The pace of construction remains insufficient to meet growing demand linked to demographics and immigration.

In 2025, Spain's population reached approximately 49.4 million and is expected to exceed 50 million in 2026. This growth, largely fueled by migration, is leading to the formation of approximately 180,000 new households per year.

However, annual production of new housing remains well below this level. Since 2022, the gap between new households and building permits has generated a cumulative deficit of more than 200,000 homes. Taking into account other factors—such as the conversion of homes into tourist rentals or purchases by foreign investors—some estimates put this total deficit at between 600,000 and 700,000 homes.

Several obstacles limit the increase in supply:

• the administrative delays in granting building permits;
• the increase in the cost of materials;
• the labor shortage in the construction industry;
• financing difficulties for real estate developers.

Stable growth prospects for 2026

For 2026, experts anticipate continued growth in the real estate market, but at a more moderate pace. Price increases are expected to gradually stabilize, particularly in certain areas where current levels are already high relative to household incomes.

However, as long as population growth remains strong and housing supply cannot keep pace with demand, pressure on prices is likely to persist, particularly in large cities and coastal areas.

In summary, the Spanish real estate market is entering a phase of growth that is more structured than that seen in the early 2000s. Buoyed by a strong economy, solvent demand, and limited supply, it should continue to grow in the coming years, while still facing the central issue of access to housing.

Read the full study