The Buoyant Spanish Housing Market: Insights and Forecasts for 2025
The Spanish housing market is poised for a vibrant 2025, with forecasts from Solvia indicating a continuation of property sales growth, albeit at a more measured pace compared to rising house prices. The rental market, in particular, is expected to see significant increases, reflecting broader trends in the real estate sector.
Strong Momentum in 2024
According to Solvia’s latest report, the Spanish property sector demonstrated robust momentum in 2024, especially during the latter half of the year. This growth was primarily fueled by several key factors: lower interest rates, stable employment rates, and an influx of interest from foreign buyers. As the supply of new-build homes begins to recover, it still falls short of meeting the strong demand, leading to higher prices and making housing increasingly inaccessible for many.
The report highlights a projected rebound in home sales of 3% to 4%, reinforcing the notion of a resilient and expanding market. Factors contributing to this growth include pent-up demand from previous years, a surge in foreign purchases, and a noticeable shift towards smaller homes, which has resulted in increased transaction volumes.
Price Increases on the Horizon
Solvia anticipates that housing prices will continue to rise throughout 2025, potentially outpacing the growth in sales. Their forecasts suggest that average property prices across Spain could increase by 4% to 5%, driven by a growing demand for housing coupled with a clear shortage of supply. This imbalance is particularly pronounced in desirable areas, such as major cities and popular tourist destinations.
By the end of 2024, Madrid emerged as the most expensive province, with average prices reaching €3,780 per square meter, surpassing the Balearic Islands. In contrast, provinces like Badajoz, Jaén, and Ciudad Real remain more affordable, with average prices below €800 per square meter.
Focusing on urban centers, Madrid and Barcelona are at the forefront of price increases. In Madrid, average property prices hit €4,030 per square meter in 2024, reflecting a year-on-year increase of 7.1%. Barcelona followed closely, with an average of €3,937 per square meter, marking a 5.7% rise over the same period.
The Rental Market Surge
The rental market is expected to experience the most significant price growth, with Solvia forecasting an increase of over 10%. By the end of 2024, Barcelona had the highest average rental prices in Spain, at €19.5 per square meter per month, followed by Madrid at €18.2 per square meter and the Balearic Islands at €17.3 per square meter. Other provinces such as Guipúzcoa, Málaga, and Las Palmas also reported rental prices exceeding €14 per square meter.
Conversely, the most affordable rental markets can be found in Zamora, Lugo, Teruel, Badajoz, Ciudad Real, and Jaén, where rents range between €5.5 and €6.8 per square meter. This stark contrast highlights the growing divide in housing affordability across the country.
New-Build Permits on the Rise
In addition to price increases, Solvia forecasts a rise in construction permits for new homes. In 2024, a total of 127,721 permits were issued, marking an 18.3% year-on-year increase and the highest figure since 2008, according to the Ministry of Housing and Urban Agenda (MIVAU). Looking ahead to 2025, Solvia projects further growth in new housing permits of 5% to 10%, reinforcing the positive trend in the construction sector.
However, several challenges persist. Issues such as a lack of legal certainty, limited availability of land for development, a shortage of qualified professionals, and high construction material costs continue to impact production expenses and the overall viability of new housing projects.
Conclusion
The Spanish housing market is navigating a complex landscape characterized by rising prices, increasing demand, and a gradual recovery in new construction. As we move into 2025, these trends are likely to shape the real estate sector, influencing both buyers and renters across the country.
