Spain’s housing market is experiencing a resurgence, with property sales surging by 41.5% in September, marking the highest growth rate in 17 years. Analysts predict over 620,000 property transactions by the end of 2024, making it the second-best year for sales in history, closely following the 2007 housing boom.
This uptick comes as buyers rush to secure homes before anticipated price increases in 2024 and 2025, spurred by favourable mortgage conditions, falling Euribor rates, and government-backed financial aid. September alone saw 61,887 transactions, a figure unmatched since 2007.
The drivers behind the housing market boom
Industry experts point to multiple factors fuelling the housing surge. A combination of lower interest rates, increased household savings, and buyer optimism has created a dynamic market environment. Many families are advancing their purchasing plans, expecting property values to climb due to rising demand and a tightening supply.
“This represents the start of a new housing boom,” says María Matos, director of studies at Fotocasa, emphasising that confidence in the market is driving sales upward. Meanwhile, government policies such as ICO-backed guarantees and financial aid are further incentivising purchases.
Golden Visas and foreign demand
Foreign buyers are also adding to the frenzy, particularly those seeking Spain’s Golden Visa before its anticipated phase-out. The Spanish government, led by Prime Minister Pedro Sánchez, has started the process to repeal the visa, likely to end by year’s close. Herewith, the government aims to address rising concerns about affordability and limit the influence of speculative foreign buyers driving prices up in prime locations. The interest of these foreign buyers, combined with domestic demand, is pushing the market to unprecedented activity levels.
Low interest rates and high buyer optimism
Spain’s property market is experiencing renewed dynamism as falling interest rates and improved mortgage conditions fuel buyer confidence. The declining Euribor and increased household savings are encouraging families to act quickly, with analysts predicting strong activity in late 2024 and 2025. According to Francisco Iñareta, spokesperson for Idealista, the surge in demand is partly driven by lower financing costs and the perception of imminent price hikes. “Many families have brought forward their decision to buy,” he explains. Herewith, underscoring the urgency among buyers in a tightening market. Despite a historically low housing stock, the year is on track to end with over 600,000 property transactions, a level of activity not seen since Spain’s pre-2008 housing boom.
New-build properties gain momentum
Demand for new-build homes soared by 54.9% in September compared to the previous year, reaching 12,531 transactions and representing 20% of all sales. In contrast, second-hand properties grew by 38% during the same period. Experts attribute this surge to buyers’ preference for modern, energy-efficient properties, despite the challenges developers face, including rising material costs and bureaucratic delays.
Prices to continue rising
With demand outpacing supply, housing prices are expected to rise steadily. Matos warns of “a serious price surge” if current demand levels persist, particularly in major cities. The reduced stock of available homes, paired with a growing pool of buyers, is likely to exacerbate affordability issues for young people and low-income families.
Looking ahead, experts forecast a 30% increase in active buyers by the end of the year, driven by falling interest rates and re-entering buyers who previously paused their plans. While this activity highlights the market’s vitality, it underscores the pressing need for more supply to meet soaring demand.
Also read: Record new build house prices in Spain