The Spanish housing market is in a lively growth phase, with faster-rising prices and strong demand. This upswing, clear in 2024 and rolling into 2025, is supported by lower interest rates, a stronger job market, population growth from immigration, and steady foreign buying. While momentum is strong, affordability pressures in cities and tourist areas and a tight supply of homes remain major issues. The outlook stays positive, though price gains may cool as more homes come to market.
The strength seen in Spanish property reflects the wider economic rebound and the country’s lifestyle appeal. Despite global uncertainty, Spain has kept a steady course, attracting buyers from home and abroad. It helps to know how these forces work together if you plan to take part in this busy market.
Spanish housing market key trends in 2024
How has demand for property changed this year?
Demand picked up clearly in 2024 after a small dip in 2023. Home sales for the year rose 10% to 642,000, the third-highest reading on record after 2007 and 2022. The final quarter of 2024 was especially active, with sales up 34.3% year on year, pointing to solid activity carrying into 2025.
Several drivers are at work. Falling interest rates made mortgages easier to get. Strong job creation and recovering household purchasing power lifted confidence. Migration and firm foreign demand also added to buying. In January 2025, sales kept rising, up 11% year on year to 60,650 units.
Which regions are showing the strongest growth?
All 19 autonomous regions posted price gains in Q4 2024. Andalucía led with 13.4% year-on-year growth, ahead of Aragón (13.3%), Navarra (12.9%), Melilla (12.2%), and the Valencian Community (12.2%). La Rioja (11.9%), Cantabria (11.8%), Asturias (11.7%), and Murcia (11.7%) also saw double-digit growth.
| Region | House price growth (y/y) |
|---|---|
| Andalucía | 13.4% |
| Aragón | 13.3% |
| Navarra | 12.9% |
| Melilla | 12.2% |
| Valencian Community | 12.2% |
For home sales, 18 of 19 regions saw increases in 2024. The biggest rises were in:
- Ceuta: +27.37% y/y
- Galicia: +22.31% y/y
- La Rioja: +20.01% y/y
- Castilla-La Mancha: +19.48% y/y
By share of national sales in 2024, Andalucía led with 19.6%, then the Valencian Community (16.3%), Cataluña (15.5%), and Madrid (12%). These patterns show the varied pull of different areas within Spain.
Trends in new vs. existing home sales
New and existing homes moved at different speeds in 2024. New home sales jumped 23.4%, while existing home sales rose 6.9%. New builds took a 21.0% share of all sales, up from 18.8% in 2023.
This stronger new-build activity suggests developers are adding more supply. In January 2025, new dwelling sales climbed 30.9% year on year, while existing home sales were up 6.1%. Buyers are favoring new homes for modern features and better energy use, and builders are slowly easing the supply gap.
Socio-economic drivers of the Spanish housing market
How does the labor market affect demand?
A strong job market supports housing demand. Spain’s economy grew 3.2% in 2024, helped by consumer spending and hiring. More jobs lift incomes and confidence, making people more likely to buy or rent.
Unemployment fell to 10.61% in Q4 2024, the lowest since Q2 2008. Along with pay increases, this gives households more spending power, feeding into the active housing market across the country.
Population growth, migration, and housing needs
Population growth, driven by immigration, is pushing up housing needs. Spain’s population rose 0.9% to 49 million in the past year, adding 458,000 people, mainly from abroad. This creates immediate demand for both owned and rented homes.
The rental impact is large: 57.0% of households headed by an EU national rent, and 70.5% for non-EU, compared with 14.7% for Spanish-headed households. This puts more pressure on the existing stock and shows why more homes are needed.
Risk of poverty and housing tenure
While the market is lively, gaps remain across income groups. Renters are more exposed to low incomes: about 40% live near the poverty line, compared with 11.2% of owners.
Rising rents make this harder, especially for lower-income households. More people are renting-20.4% in 2024, up from 18.7% in 2023-often due to barriers to buying, affecting younger people and immigrants most.
Impact of government policies such as the Golden Visa withdrawal
Policy changes matter. Since 2013, the Golden Visa let non-EU nationals get residency by investing over €500,000 in property. Most applicants chose real estate (96%), with strong interest from China, Russia, the U.S., and the U.K.
On April 3, 2025, Spain removed the real estate option from the Golden Visa, citing price and affordability concerns in cities like Madrid and Barcelona. Current visa holders and those who applied before the deadline keep their rights. The longer-term effect on foreign buying and prices, especially in areas popular with Golden Visa investors, is not yet clear, and the change points to more focus on local affordability.
House price developments and regional differences
Current average house prices in Spain
Prices are rising fast. Idealista reports a nationwide increase of 11.16% year on year in Q1 2025, to €2,311 per sqm. Full-year growth was 11.21% in 2024 and 8.16% in 2023.
Other data sets align with this faster pace. The Banco de España showed a 7.05% rise in Q4 2024 to €1,972 per sqm, the quickest since Q1 2007. INE reported an 11.26% year-on-year gain in Q4 2024, its sharpest annual rise since 2007. Prices are moving up at a fast clip.
How do prices compare to previous peaks?
Spain is still working back to, and in some cases beyond, pre-2008 highs. In nominal terms, average prices in 2024 were about 6.2% below the pre-crisis peak. INE’s transaction-based index, however, suggests nominal prices are 7.1% above the previous high. This small mismatch shows results can vary by data source and method.
After inflation, real prices in 2024 were 31.3% below peak levels. New-build prices in nominal terms are 42.6% above their prior high, but in real terms only four regions-Balearic Islands, Andalusia, Canary Islands, and Madrid-have set new highs. Some areas are thriving, while the broader recovery in real terms is still ongoing.
Price variations between cities and rural areas
Price growth is uneven. Big cities and tourist coasts see stronger gains, helped by high demand, better infrastructure, and more jobs. Madrid, Barcelona, and many coastal zones carry higher prices.
Rural areas usually see smaller moves. Affordability issues are sharper in cities and popular tourist spots, where demand from residents and visitors meets limited supply.
Factors driving house price fluctuations
Current price moves reflect several forces:
- Demand running ahead of supply, backed by a strong job market, population growth from immigration, and foreign buyers
- Cheaper financing after a fall in mortgage rates
- Limited new supply, even as building picks up
- Higher construction costs over recent years
- Local conditions, such as tourism strength and new infrastructure
Supply and construction activity across Spain
Volume of new housing construction
Building is recovering but still behind demand. Housing starts rose 14.5% in 2024 to 112,220 units, after a 1.1% rise in 2023 and a 3.5% fall in 2022. Completions were up 7.6% to 86,609 units. These levels remain far below the 1995-2008 average of 445,000 starts per year.
In 2024, Castilla y León led with a 47.1% jump in starts, followed by Ceuta (39.1%) and Navarra (37.4%). Andalucía, Madrid, and Cataluña also posted strong gains and large shares of activity. Even with this progress, supply still trails demand by a wide margin.
Land prices and their impact on supply
Land costs shape the price and pace of new building. In Q4 2024, urban land averaged €175.5 per sqm, up 13.5% year on year and 4.3% from the prior quarter. Higher land costs, especially in prime spots, lift project costs.
At the same time, land deals fell 6.8% in 2024 to 20,856, continuing declines from 2022 and 2023. Rising prices with fewer transactions point to scarcer buildable land in sought-after areas. This can slow projects or raise final home prices, adding to supply and affordability pressures.
The gap between population growth and new builds
A big gap has opened between fast population growth and the flow of new homes. Spain added 0.9% to its population last year, but new housing is not keeping up. In 2024, an estimated 112,000 to 136,000 net new households formed, while completions were 86,609. The shortfall adds to an estimated deficit of about 325,000 homes, which could grow.
This mismatch is a key reason prices and rents are rising. Building is improving but still not enough to meet demand from demographic change. Until supply meets or exceeds new household formation, pressure will remain in both buying and renting.
Rental market overview and emerging policies
Rental yield averages in major cities
Gross rental yields vary by city. In Q1 2025, the nationwide gross yield was 5.6%, down from 5.93% in Q3 2024 and 6.17% in Q1 2024.
| City | Average gross yield |
|---|---|
| Barcelona | 7.52% (range: 4.04%-9.38%) |
| Murcia | 6.56% |
| Valencia | 6.19% |
| Córdoba | 6.05% |
| Madrid | 4.82% |
Lower yields in Madrid reflect higher purchase prices relative to rents, while Barcelona and several mid-sized cities offer higher average returns.
Rising residential rents and affordability
Rents have climbed fast. In 2024, the national average rent rose 11.5% to a record €13.5 per sqm. Barcelona led with €23.4 per sqm (+13.9% y/y), and Madrid reached €20.7 per sqm (+15.3% y/y).
Strong demand from population growth and tight supply are the main drivers. Many lower-income households face rent-to-income ratios near 45%, making it hard to find affordable housing.
New rent control measures and effects on landlords
To slow rent spikes, Spain started new rules on January 1, 2025, under Law 12/2023 (Right to Housing Act). The Housing Lease Reference Index (IRAV), built by INE, now guides rent updates instead of CPI alone, which had pushed rents higher during high inflation.
IRAV caps annual updates by using the lowest of three values: CPI change, core inflation, and an adjusted average annual rate. It applies to primary residence leases signed after May 25, 2023. Earlier temporary caps limited increases to 2% in 2022-2023 and 3% in 2024. These steps support tenants but may limit rent growth for landlords, affect investment choices, and, for some owners, make selling more attractive than holding a capped rental.
Shifts in the ratio of renters to owners
Spain still has high ownership (75% in 2022 vs. 65% in the EU), but renting is growing. Households in rental homes rose to 20.4% in 2024 from 18.7% in 2023, with 17.0% at market rates and 3.4% below market.
Migration is a big factor, as foreign households rent more often than Spanish households. Younger and lower-income groups also face higher prices and tighter mortgage conditions, pushing many to rent. This points to a larger and more important rental sector over time.
Mortgage market trends and financing conditions
Availability and volume of new mortgage loans
New mortgage lending rebounded in 2024. The value of new home loans rose 14.2% to €61.73 billion, after falling 19.7% in 2023. The number of new loans increased 11.2% to 423,761.
In January 2025, lending stayed strong: new home loans by value were up 26.6% year on year to €5.8 billion, and the number of loans rose 14.9% to 38,058. Activity is still below the 2003-2010 average of €126.6 billion per year, so there is room for more growth.
Movement in mortgage interest rates
After sharp increases from late 2022 to mid-2024, mortgage rates have started to ease with lower inflation and changes in ECB policy. Lower rates make financing more attractive to buyers.
In February 2025, the average rate on new housing loans was 2.87%, down from 3.62% a year earlier. Floating-rate loans with up to 1-year fixation were 3.27%, down from 4.01% a year before. Rates on loans fixed for over 10 years also fell. Cheaper borrowing is supporting demand.
Trends in foreclosures and distressed properties
Foreclosures keep falling, a sign of better household finances. In 2024, foreclosures dropped 3.8% to 12,655 dwellings, after declines of 23.2% in 2023 and 17.2% in 2022.
Existing-home foreclosures were down 4.1%, and new-home foreclosures edged down 0.7%. Andalucía posted the biggest drop (-19.5%), followed by the Valencian Community (-13.1%) and Madrid (-4.1%). Some areas saw increases, such as Melilla (+233.3%) and Castilla y León (+37.3%), showing local differences. Overall, fewer foreclosures point to a steadier market.
Comparing Spain’s housing market with Europe and globally
How do Spanish property trends align with the rest of Europe?
Many European markets cooled in 2023-2024 due to high inflation and rising mortgage rates. Places like Germany, France, and the U.K. saw price declines in Q1 2024.
Spain moved the other way, with prices still climbing. Solid economic growth, population gains, and stronger demand helped. While ECB policy shapes borrowing costs across the euro area, Spain’s domestic demand and foreign interest helped it outpace several neighbors.
Global property demand: Is Spain still a popular choice?
Global property activity has slowed in many OECD countries, and affordability has worsened in several of them. Even so, Spain remains a favorite for international buyers thanks to its pricing compared with some peers, climate, and rental potential.
Foreign buyers made up a large share of sales in recent years. In 2023, they bought over 87,000 homes, about 15% of all transactions. Demand from the U.K. and the U.S. has been strong, including after Brexit. While removing the property route in the Golden Visa may trim some flows, Spain’s lifestyle, culture, and economic rebound keep it high on many buyers’ lists.
Frequently asked questions about the Spanish property market
Is now a good time to buy property in Spain?
For many buyers, 2025 looks favorable, but your own budget and target area matter. Prices are rising and demand is strong, and lower mortgage rates make financing easier and cheaper.
The economy is on solid ground, with firm hiring and returning investment. Investors may still find room for price gains and decent yields in major cities. Be mindful of tight supply and higher prices in urban and tourist hotspots, where competition can be intense and quick decisions may be needed.
How are foreigners affected by recent regulatory changes?
On April 3, 2025, Spain ended the real estate investment path within the Golden Visa. Non-EU nationals can no longer gain residency by buying property above a set amount. The change aims to ease affordability issues for locals in high-demand areas.
Existing Golden Visa holders and applications filed before the cutoff keep their rights. Foreigners can still buy and sell property in Spain without limits. Some non-EU investors who focused on residency may rethink their plans, but Spain’s broad appeal for foreign buyers remains strong.
What are the biggest challenges for buyers and renters in 2024?
Buyers face fast price growth and a short supply of homes, especially new builds, which means more competition and fewer choices in popular areas. The gap between incomes and prices is still wide in some markets.
Renters face sharp rent increases and tough affordability, especially in big cities. Double-digit rent gains push many households, including younger people and immigrants, to spend a large share of income on housing. New tools like IRAV may slow future increases, but today’s high starting point and limited affordable stock make finding suitable rentals difficult for many.
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