Market Overview (2025) – After a modest 2023, Spain’s property market rebounded in 2024 and remains strong entering 2025. Lower ECB rates and easing inflation have boosted demand. House sales hit ~642,000 in 2024 (+10% yoy) globalpropertyguide.com, and early 2025 data (Jan sales +11% yoy) show momentum continuing globalpropertyguide.com. Sales are spread countrywide: Madrid (+10.6% yoy) and Valencia (+9.0%) saw large gains, Catalonia +8.5%, Andalusia +6.9%, and the Canaries +4.6% globalpropertyguide.com. Supply remains tight: building permits are rising (128k in 2024, forecast 135k in 2025) but still below household formation caixabankresearch.com, sustaining upward pressure on prices. As a result, national house prices rose roughly 5–8% in 2024 cbre.com caixabankresearch.com and rents jumped ~11.5% globalpropertyguide.com. Institutional forecasts see continued growth: CaixaBank projects ~650,000 home sales and ~5.9% price growth (MIVAU index) in 2025 caixabankresearch.com caixabankresearch.com, while Solvia (Idealista) expects sales +3–4% and prices +5% in 2025 idealista.com idealista.com.
Residential Sector – Demand is broad-based. In 2024, 18 of 19 regions saw rising sales globalpropertyguide.com. New-build sales surged (up 23% in 2024 globalpropertyguide.com), the highest since 2013, reflecting a lack of resale stock and strong developer activity. However, housing starts lag behind demand: planning applications are down sharply and remain well below pre-2019 levels lucasfox.com. Mortgage lending is firming: new home loans jumped +14.2% in 2024 to €61.7bn globalpropertyguide.com, helped by falling Euribor. By Feb 2025 the average interest on new mortgages was ~2.87% (vs 3.62% a year ago) globalpropertyguide.com. This sharp easing (ECB cut rates to ~3% by end-2024 caixabankresearch.com) has spurred buying: CaixaBank sees housing transactions reaching ~650k in 2025 caixabankresearch.com.
Regional differences are notable. Madrid remains a top draw, with prices ~€3,000–6,000/m² for apartments. Sales in the Madrid region rose ~10.6% in 2024 globalpropertyguide.com. Barcelona/Catalonia also saw strong activity (+8.45% sales growth globalpropertyguide.com) but supply is constrained by limited new land. Valencia and its coast (Alicante, Castellón) accounted for 16.3% of national sales in 2024 globalpropertyguide.com, with new developments expanding in growth corridors. Andalusia/Costa del Sol (Málaga, Cádiz, etc.) led national sales share (19.6% of all homes globalpropertyguide.com) thanks to domestic and foreign demand for affordable sunbelt living. Balearic Islandssaw huge foreign interest (one-third of demand) but a modest 3.8% drop in sales in 2024 globalpropertyguide.com. Canary Islands remain popular with Europeans; sales were up ~4.6% globalpropertyguide.com.
Commercial Real Estate – 2024 marked a rebound in investment and leasing. Offices in Madrid and Barcelona showed strong leasing. Madrid office take-up reached ~500,000 m² in 2024 (+40% yoy) cbre.com; Barcelona is expected to clear ~300,000 m² in 2025 (over 280,000 m² in 2024, +20%) cbre.com. Office investment in 2024 was ~€1.50 billion (+25% yoy) cbre.com, led by smaller deals and corporate acquisitions. Madrid offices accounted for ~€600m of this, Barcelona ~€440m (+70% yoy) cbre.com. Prime office yields are ~4.85% in Madrid and ~4.95% in Barcelona cbre.com, expected to compress further in line with other European markets.
Retail is gaining momentum. High-street leasing transactions rose ~11% in 2024, with prime locations limited in supply cbre.com. As a result, average prime rents on major shopping streets jumped ~7% in 2024 cbre.com. Shopping centers likewise improved: footfall and sales recovered (sales +4.7% YoY), and occupancy rates climbed to four-year highs cbre.com. Investor interest returned strongly: retail investment hit ~€2.8 billion in 2024 (+135% yoy) cbre.com, about the 10-year average, making retail the 3rd-largest asset class (20% of total investment) cbre.com.
Hotels & Tourism – Spain’s record tourism boom is fueling hotel demand. In 2024, ~116 million foreign tourists visited (+4% vs 2023), generating 364 million guest-nights (+5%) and ~€17% higher spending cbre.com. Hotels averaged ~68% occupancy. Roughly 250 new hotels (17,000+ rooms) are slated to open by 2026 – one-quarter of them luxury 5-stars, concentrated in Málaga, Madrid, the Canaries and Cádiz cbre.com. Reflecting this strength, hotel investment reached €3.22 billion in 2024 (23% of all CRE investment) cbre.com. Operating metrics (occupancy, RevPAR) exceeded 2023/pre-Covid levels cbre.com.
Luxury Market – The high-end segment remains vibrant. Upscale properties in coastal and city enclaves (Marbella, Ibiza, Madrid, Barcelona) saw heavy demand. Notably, wealthy US buyers are now paying the highest prices per m² of all foreign groups reuters.com. Non-resident buyers (20% of transactions) paid an average of €2,362/m² in H2 2024 vs €1,713 by locals reuters.com. Lucas Fox reports that luxury sales in 2024 surged: branded residences and premium villas were a “standout” segment lucasfox.com. Over 62% of new homes in Madrid Nuevo Norte will be affordable, reflecting policy, but many luxury units are being built alongside (see below).
Rental Market (Long vs Short-term) – Long-term rents spiked in 2024; Idealista data show a national rent index up 11.5% (to ~€13.5/m²) globalpropertyguide.com. Major city rents hit records: Barcelona €23.4/m² (+13.9%), Madrid €20.7 (+15.3%), Palma €17.2 (+11.9%), Málaga €15.1 (+11.4%) globalpropertyguide.com. Gross rental yields (annual rent/property price) are moderate: ~5.6% nationally in Q1 2025, down from ~6.2% a year earlier globalpropertyguide.com. City yields range widely – Barcelona ~7.5% avg, Valencia ~6.2%, Madrid only ~4.8% (due to higher prices) globalpropertyguide.com. With housing still scarce and interest rates low, rental demand remains strong, especially from young professionals and immigrants.
Short-term (tourist) rentals have surged despite attempts to rein them in. Exceltur reports that Airbnb-style supply jumped ~25% from 2022 to 2024, outpacing lodging growth reuters.com. In hotspots: Madrid short-term rentals +49% (now 38% of tourist beds) and Málaga +36% over two years reuters.com. This growth has contributed to an estimated national housing shortfall of ~450,000 units reuters.com. In response, regulations are tightening: as of July 1, 2025 a unified Tourist Rental Registry is required (all short-let units must have a registration code to advertise online) idealista.com. From April 3, 2025 new rules mandate explicit community approval for holiday rentals in a building (majority vote of owners) ldrgroup.nl. Meanwhile, long-term rents will no longer be indexed to inflation: starting 2025 Spain uses a new “reference index” (IRAV) for rent hikes, capping increases by a formula globalpropertyguide.com.
Regional Market Breakdown
- Madrid: Spain’s largest market (~12% of all sales globalpropertyguide.com) is tight and expensive. Q4 2024 prices in Madrid Community rose ~9.4% yoy caixabankresearch.com (among the highest nationally), and prime rents soared 15%. New projects (like Madrid Nuevo Norte, see below) promise more housing (10,500 homes) and offices (1 million m²) news.griclub.org news.griclub.org. Investment flows increased: offices, living and hotels drew ~€1.3bn in Q1 2025 cbre.co.uk, and Madrid is ranked #2 globally for investor intent (CBRE).
- Barcelona/Catalonia: Sales share ~15.5% (2024) globalpropertyguide.com. Prices in Barcelona grew ~8% in 2024 and high-end inventory is limited. New homes are scarce and buoyed by foreign interest. Notable projects: the long-awaited Barcelona Sagrera rail hub (a €2 billion build with 3.7km green cover) will open by 2028 en.wikipedia.org, freeing land for development. Office leasing and retail in Barcelona both accelerated in 2024 cbre.com cbre.com, reflecting economic dynamism.
- Valencia Region: With 16.3% of national sales globalpropertyguide.com, Valencia’s market is strong. Alicante province (Costa Blanca) saw especially high foreign buying (over 45% of buyers in Q4 2024) cottageproperties.es. Urban centers (Valencia city, Alicante) have rising rents (+12% in 2024 in Valencia city) globalpropertyguide.com. Infrastructure upgrades (new tram lines, port expansion) and tech growth support demand.
- Andalusia/Costa del Sol: Andalusia (19.6% of sales) leads the country globalpropertyguide.com. The Costa del Sol (Málaga province) is a foreign magnet: Brits, Scandinavians and others buy here, pushing rents and sales up (~Málaga city rent +11.4% in 2024 globalpropertyguide.com). Inland cities (Seville, Granada) also see more interest as prices rise. Public funds are flowing into transport (new Metro lines, airport upgrades), improving accessibility.
- Balearic Islands: Tourism and foreign ownership dominate. Roughly one-third of buyers in Mallorca/IBIZA are international globalpropertyguide.com. In 2024 the Balearics were the only region with a modest sales decline (-3.8%) globalpropertyguide.com, partly due to saturated high-end market. Nevertheless, rents are highest in Spain (Palma €17.2/m², Ibiza even more) globalpropertyguide.com. Renewable energy rules and second-home taxes (under discussion) may influence future demand.
- Canary Islands: Moderate growth (sales +4.6% in 2024) globalpropertyguide.com. Strong tourism drives demand in Tenerife, Gran Canaria and Lanzarote. Foreign buyers (especially Northern Europeans) account for ~20–25% of transactions. Real estate there still offers higher yields (~5–6%) due to lower prices.
Pricing Trends & Forecasts
National house prices rose ~5–8% in 2024. Official data (MIVAH) show +5.8% (2024 vs 2023) caixabankresearch.com, while the Notaries’ index registered +8.4% for 2024 caixabankresearch.com. Key regions saw double-digit growth: Balearic Islands +12.1% (Q4 2024) and Madrid +9.4% caixabankresearch.com. Lower-tier markets in northern Spain are growing even faster (western/northern provinces up 11–15% in Q4, Caixabank notes) as buyers seek value.
Looking ahead, institutional forecasts are upbeat. CaixaBank predicts ~5.9% nominal price growth in 2025, easing to ~3.0% in 2026 as supply begins to catch up caixabankresearch.com. Solvia projects ~+5% price growth in 2025 idealista.com. Mortgage credit is expected to remain plentiful as ECB policy loosens; banks may cut borrowing costs further. By 2030, experts expect positive but more moderate gains (prices roughly doubling by 2030 from 2020 after inflation adjustment). Continued population growth (IMF sees +1.2%/yr) and housing undersupply underpin these forecasts caixabankresearch.com.
Demand and Supply Dynamics
Demand: Driven by domestic and foreign buyers alike. Continued population and workforce growth (including immigration) is creating new households. Employment is near pre-Covid levels and wages are rising, supporting buying power. Recent data show pent-up demand: Solvia notes many buyers held off in 2022–23 due to high rates, now returning idealista.com. Foreign interest is surging: foreigners bought ~69,400 homes in H1 2024 (20.4% of all sales) idealista.com. UK citizens remain the largest group, but Americans (+2× vs 5 years ago) and Moroccans are especially active reuters.com.
Supply: Historically tight. New construction is ramping up but from a low base: building permits grew ~16% through 2024 (107k Jan–Oct) cottageproperties.es, but planning applications overall remain below pre-2019 levels lucasfox.com. Shortage of land is acute in major cities (Madrid/Barcelona). The housing stock is aging: only ~5% of Spanish housing is <5 years old. This imbalance – rising demand vs limited new supply – is the main driver of price growth caixabankresearch.com.
If supply surges (e.g. as Permits reach 135k+ in 2025 caixabankresearch.com) growth may moderate. But at present almost every expert agrees supply constraints will keep the market tight for years. In the rental sector, low vacancy (~2–3% in cities) is also causing steep rent increases.
Legislative & Regulatory Developments
Recent policy changes are reshaping the market:
- Residential Rental: The Right to Housing Act (Ley 12/2023) has introduced a new Reference Rent Index (IRAV)from Jan 2025 globalpropertyguide.com. IRAV caps annual rent hikes by the lesser of CPI, underlying inflation, or a fixed average rate, replacing previous inflation-linked increases globalpropertyguide.com. From 2024, interim caps (2–3%) were used, but IRAV will govern new contracts after May 2023. This aims to stabilize rents (30% of Spaniards rent their home) globalpropertyguide.com.
- Tourist Rentals: On April 3, 2025, Spain overhauled holiday lettings. The Horizontal Property Law now requires express approval by the building community (3/5 majority) to operate a tourist rental ldrgroup.nl. No permit means no short-term letting. In July 2025 Spain implements the EU’s new short-let rules: all homes rented short-term must register in a national registry (Registro Único) and display the registration code in online ads idealista.com. These moves are designed to channel units into long-term rentals and curb illegal lettings.
- Golden Visa: Spain removed the real-estate Golden Visa route on April 3, 2025 globalpropertyguide.com. Investors had obtained residency by buying €500k+ property (peaked at ~681 visas via real estate in 2019 globalpropertyguide.com). The government cited upward pressure on city prices globalpropertyguide.com. Existing applicants keep their permits, but new ones can no longer invest through real estate. This is expected to dampen some luxury/mixed-use developments but English-speaking and EU buyers continue unabated.
- Other Measures: Authorities have considered vacancy taxes and municipal incentives for affordable housing, but no sweeping new taxes have been enacted yet. Mortgage credit controls (loan-to-value caps) remain moderate by European standards. Overall, regulatory trends balance tenant protections with investor appeals.
Foreign Investment Landscape
Spain continues to attract global capital. In 2024 Q1, total real-estate investment was €3.3 bn (+39% yoy) cbre.co.uk, far above the European average. Madrid and Barcelona rank among the top 5 cities for international investors (CBRE). The surge includes foreigners buying homes and firms buying income properties. For example, foreign buyers (residents and non-residents) purchased ~1 in 5 homes in 2024 idealista.com. Institutions (funds, REITs, wealth investors) are expanding in living (build-to-rent, student housing), retail, logistics and tourism. Notably, foreigners pay a premium: the average price paid by non-residents was ~38% above that paid by Spaniards in late 2024 reuters.com.
FDI into Spain (broader economy) totaled ~$20.9 bn in H1 2024 santandertrade.com. While much went to services and industry, a notable slice funds hotels, offices, and housing. The U.S. is now the top source of FDI (29% of flows) santandertrade.com, and American buyers are among the most active home purchasers reuters.com. Brexit slightly cooled UK investment, but EU buyers (Germany, France, Nordic) remain strong. The demise of the Golden Visa may shift investor focus more to yield-generating assets than residency.
Mortgage & Financing Environment
Spanish banks and borrowers are adapting to changing rates. Mortgage debt (outstanding) is low by historical standards (≈31.3% of GDP in 2024 vs 60% pre-2008 globalpropertyguide.com). This provides room for credit growth. In 2024 new mortgage lending rebounded (+14.2% to €61.7 bn globalpropertyguide.com) after falling in 2022–23. The number of new mortgages (423,761 in 2024) also rose sharply globalpropertyguide.com.
Interest rates are coming down: after peaking in mid-2024, the ECB cut rates to ~3% by year-end. Spain’s average new mortgage rate was ~2.87% in Feb 2025 globalpropertyguide.com, down from 3.62% a year earlier. About 90% of loans are on floating or short-fix terms, so borrowers will benefit from further cuts (CaixaBank expects ECB main rate ~2% by 2026 caixabankresearch.com). Lower borrowing costs will sustain buyer demand and refinancing. Meanwhile banks remain conservative – LTVs are moderate (typically 80%), and lending criteria tight by past bubble standards.
Major Development Projects
Several large-scale projects will shape the future market. Madrid Nuevo Norte (MNN) is the flagship: a 3.4 km² (2.6 million m² buildable) mixed-use expansion north of Chamartín station. MNN will deliver ~10,500 homes (38% affordable; 62% higher-end) and a new Central Business District with 1 million m² of office space news.griclub.org news.griclub.org, plus 400,000 m² of parks (including a 13ha central park) news.griclub.org. MNN is forecast to create ~350,000 jobs and add €15.2 billion to GDP over 25 years news.griclub.org.
Major urban projects: e.g. Madrid Nuevo Norte (artist’s impression above) will add 10,500 homes, 1.6 million m² of offices, and extensive green space news.griclub.org news.griclub.org.
Other cities have their own projects: Barcelona’s Sagrera Station is under construction (~€2 billion cost) and expected to open by 2028 en.wikipedia.org. The Sagrera complex includes burying tracks and creating a 3.7 km linear park above them en.wikipedia.org, unlocking land for housing and offices. In Valencia, plans for the old riverbed and port areas (Ciudad de las Artes expansion, Parque Central) will free new residential land. The Plaza de la Magdalena in Zaragoza is a mega-project for offices and hotels on a former river island. 22@ tech district in Barcelona and 22@ sectorexpansions continue, with mixed-use conversions of former industrial zones.
On the tourism side, major resorts and convention centers are being built. For example, Málaga’s FICO Fairgrounds(Europe’s largest events center) opened in 2023, and the Plaza Mayor II in Madrid is being expanded. In the Balearics and Canaries, luxury resort developments and second-home communities (many foreign-funded) are progressing.
Expert Forecasts (2025–2030)
Institutional reports concur on ongoing growth into 2025–26, then moderate thereafter. CaixaBank (Feb 2025) expects ~650k home sales in 2025 (versus ~642k in 2024) caixabankresearch.com and prices up ~5.9% (MIVAH index) caixabankresearch.com, before growth slows (transaction count ~620k, price +3.0% in 2026) caixabankresearch.com caixabankresearch.com. Solvia similarly projects sales +3–4% and house prices +5% in 2025 idealista.com idealista.com, noting factors like pent-up demand and foreign buyers will persist.
Over the late 2020s, trends depend on macro: if rates stay low and construction rises, price gains may decelerate into the 2–3% range. The IMF and OECD forecast Spain’s GDP growth at ~2–2.5% annually to 2030, which should support real estate demand. Possible volatility exists: a renewed rate spike (e.g. due to global inflation) could cool the market temporarily. On balance, analysts see no large bubble – Spain remains underbuilt. By 2030, house prices could be ~20–30% higher (nominal) than 2025, barring shocks.
Risks and Opportunities
Risks: Affordability pressures are the biggest concern. Spain’s price-to-income ratio is back to 2007 levels in major cities, and the “effort rate” (mortgage payment vs income) is ~35% cbre.com – one of the highest in the EU. The Bank of Spain warns of a housing gap (~450k homes missing) reuters.com. Continued rapid rent and price growth could provoke political backlash and tighter regulations. Indeed, new rent and rental laws signal a shift towards tenants. Regulatory risk: further rent controls or taxes on second homes could discourage investors. The Golden Visa cut is one example; any similar surprise measures would affect luxury markets. Interest rates: a faster-than-expected global tightening could raise mortgage costs and dampen demand. Tourism volatility: the market’s reliance on tourism means any drop in visitors (e.g. pandemic recurrence) would hurt short-term rentals and hotels.
Opportunities: At the same time, underlying strengths are clear. Spain offers comparatively high yields: apartment rents (~5–7% gross) are well above returns on EU bonds globalpropertyguide.com, which remain near 1%. With low financing costs, developers can still earn healthy spreads. The rental sector is expanding – institutional build-to-rent and alternative housing (student, senior living) are attracting capital. Large urban projects (e.g. MNN) will create long-term value and modern housing stock, opening bidding for developments. Foreign demand (from North America, Northern Europe, and Latin America) is diverse and likely to continue given lifestyle appeal and favorable currency rates for many investors. EU green building incentives will also spur renovation and new construction of energy-efficient housing (boosting activity). Overall, prudent investors see Spain as a market with sustained growth, rich rental demand, and opportunities to develop the next generation of housing and mixed-use assets.
Sources: Author’s research including official statistics (INE), industry reports, and expert analyses globalpropertyguide.com caixabankresearch.com globalpropertyguide.com globalpropertyguide.com cbre.co.uk reuters.com idealista.com cbre.com cbre.com cbre.com caixabankresearch.com.
