BBVA Research has forecast a continued rise in Spanish property prices over the next two years, driven by strong demand and limited supply.
According to its latest Real Estate Observatory, housing prices are set to increase by 7.3% in 2025, followed by a 5.3% rise in 2026. BBVA Research is part of the eponymous banking group, one of the biggest in Spain.
This comes on the back of an already robust performance in 2024, which is expected to close with a 5.8% year-on-year price increase. But don’t pop the bubbly yet—lack of supply, high land and labour costs, and regulatory uncertainty still loom over the market.
Hot spots: Balearics, Valencia and Madrid lead the pack
All autonomous regions have seen property price increases in 2024, with the Balearic Islands posting a striking 9.7% jump. The Comunidad Valenciana closely followed with 7.9%, and Madrid wasn’t far behind at 7.6%.
Despite these rises, most regions are still pricing below their 2008 peaks—offering, at least theoretically, room for further growth.
Demand rising on multiple fronts
BBVA Research points to a cocktail of demand-side pressures fuelling the market: an improving economy, a solid job market, demographic tailwinds, recovering foreign demand, and the gradual easing of interest rates. All of this is keeping buyers in the game—and keeping prices climbing.
After a strong 2024 (with transaction volumes up 11.7%), home sales are projected to grow 9% in 2025, reaching around 780,000 units. In 2026, BBVA expects volumes to rise another 5%, breaking the 800,000 mark.
In other words, buyers are back—and they’re buying in bulk.
Supply still playing catch-up
While some improvement is anticipated on the supply side due to rising demand and renewed public-sector interest in building more social housing, structural constraints remain. Buildable land is scarce, construction labour is limited, and regulations continue to cause uncertainty.
Still, housing starts could grow by over 14% annually across 2025–2026, representing a moderate but welcome uptick in construction activity.
BBVA estimates that in real terms (adjusting for inflation), property prices will rise by 4.2% in 2024 and 2.9% in 2026—so even when stripping out inflation, we’re still looking at gains.
Rents outpace sales
Since 2019, rental prices have surged more rapidly than property prices in every Spanish region, underscoring the growing pressure on tenants. Among Spain’s fifteen most populous provincial capitals, this trend is widespread—except somewhat in Seville and Málaga, where purchase prices have grown more sharply than rents.
With available rental supply tightening and regulatory restrictions growing, investors may continue to see strong rental yields—unless, of course, policy makers decide to intervene more aggressively.
Home affordability stretched past 29% of income
As of the end of 2024, the average Spanish household dedicates just over 29% of its salary to home ownership—slightly above the traditional affordability threshold of 30%. But that figure masks wide regional variation.
The toughest affordability conditions are in the Balearics, Basque Country, and Madrid. By contrast, in Extremadura, Murcia, and Castilla-La Mancha, households spend under 20% of their salary on purchasing a home.
Renters have it even worse. BBVA notes that, after making a down payment, the monthly cost of owning is generally lower than renting in every region of Spain.
Conclusion
Spain’s housing market shows no sign of slowing, with a potent mix of economic strength and limited housing stock driving further price growth. While sales volumes and construction activity are poised to expand, affordability remains a growing concern—especially for renters.
