Spanish Housing Market: Outlook by End-2025

The Spanish real estate market has entered 2025 at full speed. After record-breaking price growth in 2024, several cities have reached all-time highs, driven by strong demand, low mortgage rates, and a chronic shortage of housing supply. With Euribor stabilizing near 2% and international interest in Spain remaining high, the year is set to bring both opportunities and challenges. The key question is: what can buyers and investors expect by the end of 2025?

Base case — nationwide prices are expected to rise by +4–6% year-on-year by December 2025, with some major cities likely to maintain double-digit growth.
Basis for forecast:

• Bankinter: ~+5% in 2025, with a slowdown expected in 2026–2027.
• S&P: revised forecast to ~+4.5% in 2025.
• Singular Bank: cumulative ~+9% for 2025–2026.

Rentals
The rental segment is leading in growth — projected at ~+10% or more in 2025, driven by a chronic shortage of available units.

Supply
Record contraction — down –16% year-on-year in Q1 2025 and –20% in Q2 2025; this ongoing scarcity will continue to put upward pressure on prices.

Financing
Euribor has stabilized around ~2–2.1%; ECB rate cuts in 2025 have already improved mortgage affordability and will continue to support demand.

Current Situation (Mid-2025)

By mid-summer 2025, resale prices in Spain reached new historic highs:

• National average: €2,471/m² in July (+14.7% y/y)
• Prime areas: €2,391/m²

Local records:

• Barcelona — €4,943/m²
• Madrid — ~€5,718/m²
• Valencia — €3,123/m²
• Málaga — €3,467/m²
• Alicante — €2,435/m²

Supply continues to collapse:

• –15% y/y in Q4 2024
• –16% y/y in Q1 2025
• –20% y/y in Q2 2025 — the steepest drop in recorded history.

Rental stock has fallen by –56% compared with the 2020 peak.

Euribor dropped to ~2% in spring (May ~2.08%; July ~2.08%), with consensus expecting further stability at these levels — a strong support for mortgage activity.

Forecast to December 2025

Sales Prices
Base case: +4–6% y/y nationwide. Strongest gains are expected in coastal markets and major capitals (Barcelona, Madrid, Valencia, Málaga, San Sebastián), already at record highs.

Rentals
Expected to outpace sales growth — likely above +10% in 2025, sustained by supply shortages and migration/tourism demand. Example: Madrid saw ~+11–15% y/y increases in 2024–2025.

Transactions
After stabilizing in 2024 and rebounding in 2025, transaction volumes are forecast to grow moderately (~+4% y/y). Growth will remain constrained mainly by supply shortages, not by demand.

Key Market Drivers

• Severe supply shortage: Historic declines in available listings (–16% to –20% y/y in early 2025) are the primary force keeping prices on an upward track.
• Cheaper mortgages: Euribor near 2% and looser bank lending conditions are boosting purchasing power.
• Premium segment: Limited availability and sustained demand are keeping upward pressure on top-tier properties.
• Spain’s image in the EU: Seen as one of the leaders in Europe’s moderate housing market recovery, attracting capital inflows.

Risks & Uncertainties

• Interest rates: If ECB’s easing cycle stalls, mortgage demand may cool; continued moderate cuts should preserve the base-case outlook.
• New-build pipeline: Building permits fell by –10–13% y/y in 2024, which will limit new housing supply in 2025–2026. This supports prices but worsens affordability.
• Local overheating: In cities already at historic highs (Barcelona, Madrid, Valencia, Málaga, Alicante), short-term pauses or small quarterly corrections may occur — but the overall trend through 2025 remains upward.

What This Means for Buyers & Investors (by December 2025)

• Home purchase for own use: The “soft” rate window is already open; the main challenge is finding the right property. Expect longer searches and more competition.
• Buy-to-let investments: Rental growth is outpacing sales growth; vacancy risk is very low due to undersupply. Location selection remains critical.
• Premium/coastal markets: Still strong due to lack of quality stock — a “here-and-now” strategy focused on liquid, in-demand areas is justified.

By December 2025, Spain’s property market is likely to remain on an upward trajectory: moderate price growth (+4–6% nationwide, higher in prime cities and coastal areas), rental increases above 10%, and record-low supply will continue to fuel demand. Limited new construction and sustained international interest will underpin this trend, making 2025 an attractive year for both homebuyers and investors seeking stable returns in Spain’s dynamic housing market.