Spain’s residential real estate market faces a deepening crisis in 2026, as a persistent rise in house prices, underpinned by a severe shortage of supply, continues to push homeownership further out of reach for thousands of Spaniards. Despite a slight moderation compared to previous years, experts agree the combination of soaring prices and housing scarcity will intensify, transforming access to housing into a national emergency.
Historic Highs in Prices and Sales
The past three years have witnessed an explosive surge in housing costs. According to major property portals Fotocasa and Idealista, annual price increases have often topped 15%—a record pace that has driven the average home price in Spain to €226,000 as of late 2025. “Such a strong increase has never been detected in such a short time,” observes María Matos, Director of Studies at Fotocasa.
While the market reached peak prices in 2025, the momentum has not stopped. Analysts now expect prices to continue climbing, though at a more moderate rate of 4%–7% in 2026, depending on property type and location. Still, this far outpaces growth in household incomes, leaving many families struggling. CaixaBank Research warns that a housing deficit, not speculation, is the core driver, unlike the pre-2008 bubble: “There is not an excess of supply, but a serious housing deficit… and the financial health of both families and the construction sector is solid.”
Demand Outpaces Solvent Buyers
Despite consistently high demand, many potential buyers are being squeezed out. The effort required for families to purchase homes continues to mount due to rising prices and stagnant wages. As a result, markets are seeing fewer solvent buyers—those who meet bank lending standards—despite more than 700,000 sales recorded in 2025, marking the strongest year since 2007.
Now, with higher prices, a dwindling supply, and an end to ultra-low mortgage rates, property sales have begun to slow in the final months of 2025. “It seems difficult for these rates to be maintained in the coming quarters. 2026 will have a reduction in transactions,” Matos adds.
Construction Fails to Bridge the Gap
Though Spain’s construction sector is showing signs of vitality—housing starts could rise to 200,000 units this year, about a 40% increase—this remains far from sufficient. BBVA Research calculates that only 520,000 homes were completed between 2021 and 2025, yet housing demand created over 1.1 million new households in that time. Building permits lag dramatically behind the forecasted need of 330,000 new homes per year, with just 128,000 permits issued in 2024.
“Everything done so far is not enough,” warns the APCEspaña, the national association of developers and builders, calling attention to the widening gap between supply and demand, a formula almost certain to keep prices high and housing access difficult.
The Rental Market: A Runaway Horse
If buying is tough, renting is hardly better. This year, rents reached an all-time high, averaging €1,128/month nationally, and €14/square meter, up 7% year-on-year. The shortage of available rental homes is acute, particularly in Spain’s employment hubs and tourist magnets. New legislation capping rents in certain cities and the launch of 70,000 affordable, protected rental homes (offering rents 40% below the open market) are positive steps, but barely scratch the surface.
“Tenants are now fighting head-to-head for every home,” say market analysts. New lease agreements will see even sharper rises, while regulations in designated “stressed areas” could help moderate the pace of increases—keeping them roughly in line with general inflation (CPI).
The Outlook for 2026: Moderation, but Still Out of Reach
Looking ahead, most economists predict a softening in price growth—estimates range from 4% to 7%, or as much as 8.9% for new build homes. Still, this would leave prices significantly above wage growth, leading some families to withdraw from the market altogether. The rental market may see stabilization as new affordable homes come online and regulations bite, but most experts agree: without a major boost in supply, the housing emergency will persist.
As the government, developers, and financial institutions look for solutions, one thing remains clear: in 2026, the Spanish real estate market is at a turning point, where price moderation may offer some relief, but the core issue—a critical lack of supply—remains unresolved.
Key stats at a glance:
- Average home price (2025): €226,000
- Annual price growth in 2025: 13%–15% (depending on region and property type)
- Average rent (2025): €1,128/month; €14/m²
- Number of sales (2025): >700,000 (best year since 2007)
- New build price increase (2025): 8.9%, up to €3,300/m²
- Housing starts (2025): 200,000 units, still well below needed levels
- Mortgage rates for 2026: expected 2.5%–2.75% (fixed)
For now, the mantra rings true for many Spaniards: housing is no longer just an investment—it’s a social emergency requiring bold solutions and urgent action.
