The research arm of Spain’s biggest bank is bullish about the Spanish housing market for the rest of the year, but home-building costs are forecast to remain high.

Speaking at the IV National Housing Congress in Malaga the lead economist of Caixabank Research, Judit Montoriol (pictured above), explained why the bank thinks that the two cuts in interest rates by the ECB in the last four months could leave Euribor (12M) below 2.5% at the end of the year, putting more money in buyers’ pockets, and pushing up house prices. In August Euribor (12M) was 3.166% but some forecasts have it as low as 2.1% in 2025.

As a result, the bank has raised its house-price growth forecast for 2024 from +2.7pc to +4.4pc, and +2.8pc next year.

Cheaper borrowing is not the only factor that CaixaBank expects to drive up Spanish house prices in the months and years ahead. Immigration-fueled population-growth is another key factor, with 300,000 new households created every year between 2024 and 2028, according to the latest predictions from the INE, up from 215,000 in the previous forecast. 

On the other hand, new home building will fall far short of the housing needs of a growing population. Montoriol said Caixabank Research expects 115,000 housing starts (planning approvals / visados) this year and 125,000 next year, meaning housing starts of 240,000 over two years compared to 600,000 new households needing somewhere to live.

Montoriol also pointed out that construction costs have risen 30pc since the pandemic, creating another upward pressure on house prices in Spain.

CaixaBank is the owner of HolaBank, a banking brand specifically organised to take care of the banking needs of expats and second-home owners from abroad