Spain’s Housing Market: A Bright Future Ahead

Anyone hoping that Spain’s property market might start cooling down over the next few years may be disappointed. A new forecast from S&P Global Ratings suggests that house prices in Spain will continue rising faster than in almost every other European country until 2029, with only Portugal expected to see stronger growth in 2026.

For buyers, this means waiting could become even more expensive. For homeowners, it points to continued growth in property values. According to the report, prices in Spain are expected to rise by 9.1% in 2026, before continuing upwards by 7.4% in 2027, 6.2% in 2028, and 5.4% in 2029. While the pace is expected to slow gradually, Spain is still forecast to outperform the rest of Europe over the coming years.

The Driving Forces Behind Rising Prices

One of the biggest questions for buyers is why prices continue to rise when affordability has become such a challenge. According to S&P Global Ratings, the answer lies in a combination of strong demand and a persistent shortage of new homes.

Spain’s labor market has remained one of the strongest in the eurozone, with continued job creation and rising wages helping more people enter the property market. At the same time, immigration has added to the number of people looking for homes, increasing competition in many parts of the country.

On the supply side, the situation tells a very different story. The report indicates that investment in residential construction has remained largely stagnant since the beginning of 2019, despite Spain’s economy performing better than many of its European neighbors. Administrative barriers and lengthy procedures in the construction sector are cited as major reasons why new housing has not kept pace with demand.

The result is a familiar picture in many Spanish cities and coastal areas: more people are looking to buy, but there are simply not enough new properties becoming available. This imbalance continues to put upward pressure on prices.

Spain vs. Europe: A Comparative Outlook

Spain is not the only country where house prices are expected to rise, but it is anticipated to be among the strongest performers. According to the report, Portugal is forecast to record the biggest increase in 2026, with prices rising by around 10%, while Spain follows closely behind with a projected 9.1% increase.

Across Europe as a whole, however, the outlook is much more moderate. S&P expects average house prices to increase by around 4% in 2026 and just over 3% in 2027, well below Spain’s projected growth. The difference becomes even clearer when looking at some of Europe’s largest economies. In Germany, prices are expected to increase by only 1.2% in 2026, while France is forecast to see growth of around 1.4%.

Sweden, on the other hand, sits at the opposite end of the scale from Spain. S&P recently revised down its Swedish forecast after mortgage interest rates increased during the second quarter of 2026. Combined with uncertainty surrounding employment and the country’s high household debt levels, this has weakened expectations for future price growth.

Government Measures and Their Impact

The report also considers the steps European governments are taking to tackle housing affordability. In Spain, S&P highlights the 2026 to 2030 State Housing Plan, approved in April 2026, which includes €7 billion of funding aimed at increasing housing supply and tightening rules covering seasonal and short-term rentals.

However, the ratings agency believes these measures are unlikely to have an immediate impact. Building new homes takes time, planning procedures remain lengthy, and many of the policies introduced across Europe are described as reactive rather than preventive. As a result, S&P expects the shortage of available housing to continue influencing prices throughout its forecast period.

Economic Factors at Play

The report identifies several wider economic factors that are shaping housing markets across Europe. Inflation forecasts have increased following higher energy prices linked to tensions in the Middle East. Interest rates are also expected to remain higher than previously anticipated, with both the European Central Bank and the Bank of England expected to make further rate increases.

Even so, S&P argues that demand for housing has remained surprisingly resilient. Many European households continue to hold relatively strong levels of wealth, while new households are being created faster than new homes are being built. Construction continues to face familiar obstacles, including labor shortages, rising material costs, planning delays, and administrative bottlenecks.

For buyers hoping prices might begin to fall, the report offers little encouragement. Instead, S&P believes these structural pressures will continue to support higher property prices across much of Europe, with Spain expected to remain one of the continent’s strongest-performing housing markets until at least 2029.

For anyone planning to buy a home—whether as a primary residence, a holiday property, or an investment—waiting for prices to come down may prove a risky strategy if these forecasts prove accurate. While no forecast can guarantee what the market will do, S&P’s latest outlook suggests that, for now, Spain’s housing market still has plenty of momentum left.