The cost of buying a home in Spain looks set to jump 7% before the year is out, according to sector research, taking the national average price to over €1,900/m² and nudging uncomfortably close to the 2007 bubble peak.
This is not a credit-fuelled repeat of that boom. Today’s price pressures come from a far more entrenched problem: chronic undersupply. Developers aren’t building enough homes to meet demand, and it’s hitting the big cities hardest – where prices in prime areas are already pushing €3,900/m².
Three forces driving prices higher
Analysts point to three key factors behind the surge:
- Interest rate relief – After a sharp tightening cycle, the European Central Bank has started cutting rates. With the Euribor easing, mortgages are more affordable again, luring buyers back into the market.
- Pent-up demand – Thousands of potential buyers who had postponed purchases during the rate hikes are now jumping in. Forecasts suggest sales could hit 800,000 this year – up almost 25% on 2024 – with more than half in Madrid, Catalonia, the Valencian Community, and Andalusia.
- Lack of new housing – Construction output has lagged behind population and household growth for years. Without significant policy changes on land use and planning, supply will remain the bottleneck pushing prices up.
Knock-on effects in the rental market
The squeeze on buyers is spilling into the rental sector, where conditions are equally grim. Rents for whole flats are out of reach for many, and now even room rentals – traditionally the last affordable refuge – are becoming prohibitively expensive. For younger workers and students, simply finding a room in the city is fast turning into a financial ordeal.
Unless there’s a serious push to unblock new housing supply, 2025 could see affordability deteriorate further – for buyers and renters alike.
