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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 interest rate hikes being implemented by central banks in order to combat inflation are leading to concerns regarding the impact such tighter financial conditions may have on real estate markets. In many developed economies, house prices have risen considerably in recent years, a trend that accelerated during the pandemic, fuelling fears of real estate bubbles. Given this situation, the authorities in several countries have implemented a series of macroprudential instruments to cool down their market. However, in Spain the risk of a real estate bubble appears to be contained.