Whether it's the rental or purchase market, property prices in Spain have been a big talking point in recent years.
Prices have consistently risen, despite a period of inflation and high interest rates. Now, heading into 2025, the market seems set for continued demand and price rises, albeit with a slight moderation overall compared to previous years.
Judging by market forecasts from banks and property experts, property prices in Spain will, owing to high demand and low supply, see prices rising into next year.
According to a report by property firm Solvia analysed by Idealista, Spain’s premier housing platform, “property sales are expected to decline this year but rise next year, with prices projected to increase by approximately 3 percent in both 2024 and 2025.”
Solvia found that the market experienced a slight decline in total transactions in early 2024, combined with a modest increase in prices and a big increase in rental prices. This trend is expected to persist for the remainder of the year and continue in 2025.
Juan Ramón Prieto, Director of Operations at Solvia, said of the market: "The persistent lack of properties continues to put pressure on the market, and combined with constant demand, will sustain this upward trend."
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This roughly mirrors forecasts from one of Spain's main banks Bankinter, which predicts rises of 6 percent overall for 2024 and a 4 percent rise in 2025, again spurred largely by a “supply shortage in the main cities, Mediterranean coast and islands.”
Research from Caixabank is also in line with these predictions, though slightly lower, with the bank's research department forecasting a 2.8 percent increase in prices, three tenths of a percentage point higher than previous estimates.
In terms of interest rates, the Caixa market forecast is that the Euribor will fall to around 2.65 percent by the end of 2024, and that it will decrease again to around 2.1 percent during 2025, something that should in theory increase demand.
So, the experts seem to think prices seem will continue rising but will likely moderate slightly compared to 2024 levels. Most forecasts seem to think prices will rise by something between 2.8 and 4 percent overall.
Property experts AZ Hogar concluded in their price forecast roundup that “the real estate market in 2025 is likely to see a stabilisation in prices, with slight increases in large cities and possible falls in regions with lower demand.”
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Inflation and interest rates will continue to be key determinants of price developments, but also supply and how economic and political factors could influence the market. The Spanish government is coming under increasing pressure to do something about spiralling rental costs, but has made less noise about property purchases.
Despite high interest rates, 2024 did not see a significant drop in house prices, evidence that demand remains robust. Housebuilding has long been a problem in Spain, contributing to the supply side issues.
AZ Hogar also states that “projections for 2025 indicate that new housing construction may not reach the levels needed to meet demand, which could continue to drive prices upwards, especially in the most in demand urban areas.”
Compared to previous years, new housing construction has remained at a slow pace, which has contributed to the persistence of a seller's market, where demand far outstrips supply and prices rise.
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