A recent report from the research division of Spanish bank CaixaBank shows how the increasing demand for housing is coming from immigration, which puts upward pressure on house prices.

Spanish house prices are rising whichever data source you look at, by between 3.4pc in Q2 according to the notaries, and by 7.2pc in the case of asking prices according to the property portal Idealista. Prices are rising faster in hot markets like Madrid, Barcelona, Valencia and the Balearics. You can explore Spanish house price data in detail in the Data Hub.

Prices rise when demand exceeds supply, and demand for housing comes from population growth and household formation. A recent report from CaixaBank research shows how immigration is now driving almost all Spain’s population growth, and how that is pushing up Spanish house prices. The chart above from CaixaBank research illustrates how foreign population growth has dwarfed the native Spanish population growth in the last two years.

Another chart from the report shows how population growth in hot markets like Barcelona and Valencia has been driven by immigration, all of whom need housing. 

In the case of Barcelona, where locals complain about housing access and rental prices and tend to blame the problem on tourist accommodation, the foreign population grew by 163,150 people over the two-year period 2022-2023, whilst the local native-Spanish population increased by just 10,493 people. That means immigration growth was more than fifteen fold higher than native population growth, 

The report also presents a chart showing the relationship between house prices and population growth, showing a clear relationship between house prices and population growth. “Home prices are growing more rapidly in the more expensive and populated municipalities, which continue to attract new people, thus increasing the dispersion of prices between locations. Madrid, Barcelona and Valencia top the list,” explains the report.

Immigration is obviously one of the most important drivers of rising house prices in Spain, especially in hot markets like Madrid, Barcelona and Valencia. However, you never hear it mentioned in the political debate or taken into account in government housing policy, which is all about rent controls, reducing private property rights, and scapegoating landlords rather than encouraging investment in home building to  house the new migrants.

You can read the report in English at the CaixaBank research site: Population and home prices in Spain: a close relationship. CaixaBank is the owner of HolaBank, which provides banking services targeted at foreigners in Spain.