Spain is currently in the midst of a property crisis – prices have been rising uncontrollably for several years now, salaries have only increased slightly and there is a large deficit in the housing stock.
As a result, it has become very difficult for people to get on the property ladder here, particularly for young people, low and middle-income families.
The tourist rental market, foreign investment and rising interest rates have all helped to fuel the problem.
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Data from leading Spanish property search engine Fotocasa, shows that home prices have been rising by more than 20 percent year-on-year.
This is the largest increase the company has seen since their records began 20 years ago.
In fact, buying a home in Spain costs €40,000 more on average at the start of 2026 than a year ago.
According to the most recent data from the Ministry of Housing and Urban Agenda, during the third quarter of 2025 the average price per square metre reached €2,153.4, surpassing the levels seen during the 2008 housing bubble.
How long can the Spanish market sustain this increase? If so many people are struggling to be able to afford somewhere to live, at some point surely they have to start coming down.
To understand this, we have to first understand why there is a continued increase.
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Firstly, there is a big imbalance between supply and demand and as long as that continues to be the case, house prices are unlikely to fall, because there are still so many people who will pay that kind of money.
"Currently, demand is four times greater than supply. It's impossible to meet it," Matos confirms.
And it seems like that demand will just keep on rising this year. According Ricard Garriga, CEO of Trioteca in an interview with 20 Minutos “We will grant 100,000 more mortgages than last year. We will go from 425,000 to 525,000."
The easing of interest rates has also been an important factor in the increase in demand.
"We are seeing increasingly affordable fixed-rate mortgages. In fact, we have the most affordable fixed-rate mortgages in Europe,” explained Garriga.
Matos also believes that as long as Spain has so much foreign investment, prices are unlikely to drop anytime soon. “There is a very important foreign weight, buying up around 15%”.
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Niño Becerra, a leading economist in the sector and professor of economic structure, told Cadena Ser’s radio program La Ventana "Let's remember that last year - this year's data isn't available yet - half of the homes sold were paid for in cash, without resorting to mortgages, loans, or anything of the sort”.
According to the expert, this influences the rate of price increases and the perception of market accessibility.
In other words, if so many people can continue paying for properties in cash, prices are unlikely to come down.
Becerra believes that prices will continue to rise as long as there is sufficient demand and people willing to pay. “Prices will stop rising when potential demand can no longer afford to pay more," he explained.
Matos agreed, telling 20 Minutos: "There will come a time when purchasing power can't go any further, and therefore prices can't continue to rise.”
She believes that this doesn't necessarily mean they will go down though. “What will happen is that we will see prices not rise at the same rate... a process of slowing will begin. If we are currently at 17 percent, it will start to rise at a slower pace, to 15 percent, to 14 percent, until it falls below double digits, at least 10 percent."
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When will this happen?
"We estimate that for at least the next two years, if no geopolitical or macroeconomic movement occurs that causes us to enter a crisis that is not real estate-related but due to other factors, prices will continue to increase for the time being”, Matos clarified.
Rebeca Pérez, CEO of Investors also believes that a significant price drop is not expected in the short or medium term. "We will see a stabilisation of prices, but we are not going to see apartments drop by €50,000 or €100,000, it's not going to happen. Because there is still pent-up demand willing to pay, and until that pent-up demand is absorbed, it will take time”.
Garriga is a bit more optimistic saying that he believes prices will begin to fall “closer to 2027. At the end of '26 or the beginning of '27 we may start to see a slowdown in price increases, although I could be completely wrong”, he concluded.
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