Property purchases and sales have increased by 15% in Spain in the last year and mortgages by 18%, driven by the European Central Bank’s (ECB) rate cuts and foreign demand, which now accounts for 15% of transactions, with peaks of over 30% in Malaga, Valencia and the Balearics.
This is according to the latest report by the Sociedad de Tasación (Appraisal Society) entitled ‘Ten trends and challenges for the housing market for the second half of 2025’, which indicates that the average price of new housing in Spain has reached an all-time high of 3,151 euros per square metre and forecasts suggest that it will continue to rise, with an estimated year-on-year growth of 8.7% for this year.
The upturn comes against a backdrop of insufficient supply: new building permits rose by 19% year-on-year in the first quarter and new housing starts by 12%, figures that are still insufficient to meet demographic pressure. According to the INE, Spain will add 5 million inhabitants and 4 million new homes between now and 2039, concentrated mainly in large cities.
Madrid and Barcelona will account for one million new homes, while Malaga, Seville, Valencia, Alicante and Murcia will also come under strong pressure. The mortgage market is showing strength, with default rates at an all-time low of 2% compared to 5% in 2016, reflecting solvent demand, mostly from replacement buyers and foreigners.
However, a ‘pocket of excluded demand’ is consolidating, made up of young people, the middle class with salaries below 27,000 euros per year and the immigrant population, which is increasingly excluded from the market. Access to home ownership among those under 30 has fallen from 56% in 2006 to 43% today, while rents have risen by 91% in the last decade compared to a 26.5% increase in wages.