Mark StücklinSpain’s property market is booming again, but a shortage of new homes is pushing prices higher and straining affordability, according to one of the most authoritative reports on the sector.
The CaixaBank Research housing market report for the first half of 2025, written by Judit Montoriol – one of Spain’s leading experts on the subject – is one of the most comprehensive analyses available. The executive summary provides a clear overview, while readers hungry for detail can dive into the full report.
The Spanish market in expansion mode
According to the report, Spain’s housing market is firmly in an expansive phase. In the twelve months to June 2025, sales reached 700,000 – nearly 20% more than a year earlier. Demand is being fuelled by better financing conditions, rising household purchasing power, and strong population growth.
On the supply side, things are improving but not nearly enough. New housing permits were up 13% in the year to May, with around 132,000 approvals. But production is still far short of what’s needed to keep up with demand. CaixaBank estimates the accumulated housing deficit between 2021 and 2024 at between 515,000 and 765,000 homes – equivalent to 3–4% of Spain’s housing stock.
Price pressures and affordability
This shortage of supply explains much of the upward pressure on prices, which continue to accelerate and weigh heavily on affordability, particularly in high-demand urban and coastal areas. The report estimates the housing deficit could account for nearly 40% of recent price increases.
Despite talk of overvaluation, CaixaBank underlines that this is not a repeat of the 2000s bubble: households, developers, and the financial system are all in a much stronger position, making a sudden crash unlikely. Even so, the imbalances are clear, and the call for more affordable housing construction is urgent.
Foreign demand at record levels
Another standout finding is the record role of foreign buyers. In the year to Q1 2025, foreigners accounted for 18% of all home sales – about 133,000 transactions, the highest ever recorded. Non-resident buyers make up 44% of this group and tend to purchase mid-to-high or high-end properties, often driving prices higher in the areas where they concentrate.
Unsurprisingly, the Mediterranean coast and the islands remain favourites, but new hotspots are emerging in places like Castellón, Asturias, Huelva, and Córdoba, reflecting a broader spread of demand.
Why this report matters
The big takeaway is that demand – both domestic and foreign – continues to outpace supply, creating a structural housing deficit that fuels price pressures. For anyone interested in the future of the Spanish property market, the CaixaBank Research report is helpful reading.
