Donald Trump’s war in the Middle East could push construction costs even higher in Spain, adding fresh pressure to housing supply and prices. Industry leaders warn the conflict risks fuelling another round of inflation in building materials.
Spain’s construction sector is warning that the war involving the US, Israel, and Iran could drive up housing costs and delay building projects, adding further strain to a market already struggling with a housing shortage.
The warning comes from the Confederación Nacional de la Construcción (CNC), whose president Pedro Fernández Alén said the conflict risks triggering a new surge in raw material prices. That would increase the cost of building homes and infrastructure, potentially leading to project delays, abandoned developments, and reduced investment.
The sector is already dealing with a sharp rise in construction costs. According to the CNC, the price of many building materials has increased by around 45% since 2021, initially driven by supply disruptions after the pandemic and later aggravated by the war in Ukraine.
Overall, the cost of new construction in Spain has risen by more than 32% between 2020 and 2025. Further increases linked to geopolitical tensions and energy prices could push costs even higher.
When public construction contracts fail to adjust to rising costs, Fernández Alén warned, projects can slow down or even be abandoned. That risk comes at a particularly sensitive time for Spain’s housing market, which already faces a deficit estimated at around 700,000 homes.
Infrastructure and defence investment
Industry leaders also argue that Spain needs to accelerate investment in infrastructure, including projects linked to European defence capabilities. According to experts involved in the sector, the EU may soon increase spending on transport and logistics networks capable of supporting troop movements and strategic mobility.
Innovation gap in construction
At the same time, the construction industry is lagging behind other sectors in adopting new technologies. Only 11.4% of construction companies in Spain currently use artificial intelligence, compared with nearly 60% in the technology sector.
Industry groups argue that greater adoption of digital tools and data analysis could help improve productivity and reduce costs—an increasingly urgent priority in an environment of rising material prices and geopolitical uncertainty.
For Spain’s housing market, the message is clear: global conflicts can quickly ripple through supply chains and construction costs, with direct consequences for housing supply and affordability.
