Lorraine Williamson
Spain’s housing market has broken new ground. Figures from the National Statistics Institute (INE) reveal that the cost of existing homes jumped 12.8% between April and June compared with the same period last year. The rise pushes average prices above those seen at the peak of the 2007 property bubble.
The surge is not a sudden spike but the result of years of undersupply. Economists estimate that Spain has built 750,000 fewer homes than needed over the past four years. Demand requires around 240,000 new properties annually, yet construction lags at less than half that figure. With so few homes coming onto the market, competition has become intense—especially in major cities and along the coast.
Existing homes lead the way
The sharpest increases are in resale properties. Their prices climbed at the fastest pace in 18 years, while new builds, although also more expensive, showed signs of slowing with a rise of 12.1%. The INE’s index, which uses 2015 as a benchmark year, now stands close to 174 for existing homes, meaning values have risen more than 70% in a decade.
Population growth and foreign demand
Spain’s population has swelled to over 49 million, its highest in history. At the same time, international demand has accelerated: nearly one in five transactions now involves foreign buyers. This dual pressure is most evident in hotspots such as Valencia, Andalucia and the Balearics, where price rises are stretching local families to breaking point.
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Bubble or balanced?
Unlike the speculative frenzy of 2007, today’s market is underpinned by tighter regulation. Mortgages are granted more cautiously, and lending is closely monitored under EU rules. Analysts, therefore, rule out a classic bubble. Yet they also warn of overheating. In some provinces, asking prices are 5–10% above true market value, leaving the sector exposed if demand falters or interest rates climb.
A basic right
Experts argue that Spain risks deepening its housing crisis without major policy shifts. Proposals include accelerating construction, converting empty buildings, expanding social housing, and developing managed rental schemes. Without such measures, housing risks being treated more as an investment vehicle than a basic right—leaving younger buyers and middle-income families increasingly locked out of the market.