Spanish house prices are accelerating towards the end of the year, up by 8.1% in the third quarter alone—the most significant spike in over two years. This is good for the booming economy as home owners feel wealthier, but fuels resentment amongst those who are priced out of the housing market.
Online platforms like Idealista report even steeper growth, with November witnessing a whopping 10.7% national price increase. In major cities such as Valencia, Malaga, Madrid, and Barcelona, this surge is most pronounced, signalling a mismatch between supply and demand.
Demand overpowers supply
The forces propelling this Spanish housing bom are unmistakable. A cocktail of rising migration, favourable credit conditions, and an acute shortage of new housing units has created a perfect storm. Spain generates roughly 300,000 new households annually, yet only 100,000 new homes are constructed each year. This disparity is most visible in metropolitan areas like Madrid and Barcelona, where population growth has outpaced infrastructure development.
As María Matos of Fotocasa explains, “Strong demand, coupled with insufficient supply, is fuelling this escalation, particularly in high-density urban zones.”
The situation is further aggravated by a palpable shift in buyer behaviour. According to Lázaro Cubero of Tecnocasa, urgency has become a defining feature of the market. Fear of missing out is driving buyers to make decisions faster than ever before. For every property listed, 28 buyers are competing—a sharp rise from the 19-per-property ratio seen just a year ago.
The affordability conundrum
While middle and upper-middle-class families dominate transactions, the surge has created a bleak reality for lower-income households and younger generations. Average prices now exceed €2,244 per square metre nationally, with Barcelona’s figure doubling that. Affordable housing—whether to rent or buy—is increasingly unaffordable for many Spaniards, intensifying the country’s housing crisis.
As José María Basañez of Tecnitasa warns, the situation is exacerbating social inequities: “Younger and lower-income groups are increasingly locked out of the market. Without targeted interventions, such as social housing projects or purchase assistance programmes, their plight will worsen.”
The rental market offers little solace. Limited supply and inflated demand have driven rental costs sky-high, making even temporary solutions unaffordable for many. This is fueling resentment amongst locals that is showing up in protests and demonstrations in major cities.
Who’s buying?
The bulk of activity in 2024’s record-breaking 620,000 projected transactions comes from two groups: Spanish middle-class families leveraging accessible credit, and affluent foreign buyers. The latter are particularly drawn to coastal regions, snapping up second homes in locations such as the Costa del Sol and Balearic Islands.
This trend highlights a growing bifurcation: while Spain’s housing market thrives on paper, it leaves an increasing number of Spaniards behind. However, the strong market is also good for the Spanish economy, which is having one of its best years on record.
What lies ahead?
The outlook for 2025 suggests more of the same. Experts predict another year of price increases, albeit at a slightly tempered pace of 7%. Transactions are expected to exceed 700,000, driven by persistent demand. However, as Carles Sala of API Catalunya notes, unless the housing supply is addressed, affordability concerns will deepen, further marginalising the least well-off groups.
Policy solutions, such as zoning reforms and incentives for affordable housing construction, remain critical. Without them, Spain risks entrenching its housing inequality, undermining its otherwise robust economic recovery, say housing experts quoted in the Spanish press.
