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We use internal data to analyse the behaviour of foreign visitors who stay in Spain for long periods of time. This is a segment of the population that tends to stay in second homes, seasonal rental homes or specialist accommodation – segments that are experiencing rising demand in Spain’s real estate market.

Spain’s real estate market is slowing down but at a more moderate pace than predicted in the scenario published in last December’s Real Estate Sector Report.

The problem of housing affordability, both rental and ownership, has worsened in recent years and is particularly affecting certain groups such as young people. Solving this issue is no easy task and requires action to be taken on multiple fronts and over an extended time horizon. Public-private collaboration is essential for boosting the supply of affordable housing, and industrialised construction shows promise as a new way to help overcome the major challenges that the sector is facing, such as attracting skilled and female labour, while promoting more digital and sustainable construction methods.

Despite the worsening economic situation there is a marked upward trend in the real estate sector with very strong demand and a notable rise in prices. For its part, the supply of new housing is being affected by the war in Ukraine as this has pushed up construction costs even further and aggravated the material supply problems due to bottlenecks in global value chains. Consequently, the misalignment between the demand and supply of housing has intensified, with the result that house prices are likely to continue rising. However, there are several counteracting factors that should help to curb the growth in demand and prices over the medium term, including the impact of inflation on real household income and the ECB’s interest rate hikes.

Spain’s housing market ended 2025 with exceptionally high levels of activity, exceeding 714,000 transactions, the highest figure since 2007. The strength of demand – driven by population growth, improved purchasing power and favourable financial conditions – sustained high activity, particularly in the first half of the year. However, on the supply side, significant limitations persist: despite the increase in permits, the construction of new homes remains insufficient to keep up with new household creation. This imbalance between supply and demand is exerting significant upward pressure on prices, which are accelerating across the board, particularly in the most dynamic and touristic areas. Looking ahead to 2026-2027, transactions are expected to stabilise at high levels and there will be a gradual improvement in supply, although it will remain insufficient. As such, prices will continue to rise, albeit at a more moderate rate.

The Spanish real estate market accelerated in 2024, especially in the second half of the year, largely thanks to the fall in interest rates. This was added to a series of factors that are keeping housing demand very dynamic, including significant migration flows, rapid job creation and strong foreign demand. On the other hand, the supply of new housing is beginning to awaken, but it remains insufficient to address the high demand. This mismatch between strong demand and scarce supply is driving up house prices – a trend that we expect to continue in 2025.

According to estimates by CaixaBank Research, Spain has accumulated a housing deficit, now exceeding 730,000 units, as a result of rapid household formation and an insufficient response from new construction. In this article, we review the extent of this mismatch and its impact on recent patterns in house prices, which are showing increasing tension across much of the country. We also observe that the construction of new homes is not accelerating, precisely in the regions where the gap between supply and demand is most pronounced, exacerbating the imbalances and prolonging the pressure on prices. Finally, we examine the factors limiting the recovery of supply (from rising construction costs to regulatory restrictions and the lack of land designated for development, in addition to infrastructure issues) and we anticipate little improvement in the short term in the sector’s capacity to meet current housing needs.

The slowdown in exports has been one of the main sources of weakness in the Spanish economy in recent quarters. Manufacturing is particularly dependent on sales abroad and has been the epicentre of the deterioration in exports of goods.

The combination of rapid population growth and the gradual decline in interest rates, coupled with the lack of supply, is driving up home prices, particularly in the new housing market and in the most buoyant regions, as well as in those that are most popular with tourists.