Lorraine Williamson
Seventeen years after Spain’s property bubble burst, the housing market is once again testing its limits. Prices have climbed so sharply that the national average now sits just a whisker below the record highs of 2008, reigniting debate over whether Spain is heading for another affordability crunch.
The latest figures show a 10.4% year-on-year increase in the second quarter of 2025, pushing the average price to €2,093 per square metre. That marks a dramatic 44% rebound from the post-crisis low of 2014, when values collapsed to €1,456.
Why the squeeze is back
Analysts point to a cocktail of factors: tight housing supply, a booming rental market driven by tourism, and renewed international investment. Despite higher interest rates across Europe, demand for well-located homes has barely cooled. New-build properties now fetch around €2,440 per square metre—an all-time high since records began in 2010—while resale homes average €2,083, rising even faster than new stock.
Social housing offers only limited relief. Prices there edged up 1.6% to €1,188 per square metre, the highest since 2005, but availability remains scarce.
Regional winners and losers
The gulf between Spain’s priciest and most affordable regions continues to widen. Madrid tops the table at €3,631 per square metre, with the Balearic Islands and Gipuzkoa both exceeding €3,000. Barcelona follows closely at €2,921. At the other end of the spectrum, buyers in Extremadura and Castilla-La Mancha can still find homes for under €1,100—less than a third of the Madrid average.
Lessons from the past
The current surge inevitably invites comparisons with the pre-crisis frenzy. Yet market watchers note key differences: stricter lending rules, a healthier banking sector, and a more diversified economy. Even so, the pace of growth is stirring concern among younger Spaniards, many of whom already face stagnant wages and rising rents.
What comes next
Economists expect demand in flagship markets to stay strong through 2026, but slower growth could emerge if interest rates remain elevated. Meanwhile, bargain hunters may look inland, where prices remain comparatively low and small towns are courting newcomers with tax breaks and lifestyle perks.
Spain’s housing story, once a cautionary tale of boom and bust, is again shaping the fortunes of families, investors and policymakers alike—this time with sharper lessons from the past.