Bankinter forecasts Spain property prices will surge by 7% in 2026, driven by a mounting housing deficit and robust foreign demand. Learn more about Spain’s housing market outlook, rental trends, and investment opportunities.
Spain Property Prices Set to Rise 7% in 2026 as Supply Crisis Deepens: Bankinter Report
The Spanish real estate market is bracing for yet another surge, with Bankinter forecasting a 7% increase in property prices by 2026—three percentage points higher than its previous projection. This sharp revision comes amid a deepening housing shortage that will require an estimated two million homes to be built over the next decade, marking a critical juncture for Spain property prices and the wider real estate landscape.
According to the latest ‘Real Estate Report’ from Bankinter, property prices across Spain are expected to climb by 7% in 2026. This growth will coincide with an escalating housing deficit—currently estimated at 700,000 homes—that could surpass two million units in the next ten years if current trends persist.
Foreigners are playing a pivotal disruptive role in the market, with overseas purchases accounting for 20% of transactions nationally and up to 40% in some regions. Meanwhile, renting is becoming increasingly unattainable for the average Spanish household, with effort rates now exceeding 50%. Despite rising prices, Bankinter signals that Spain is not heading toward a 2007-style bubble, thanks to higher household incomes and more sustainable property values.
Spain Property Prices in 2026: Bankinter’s Revised Forecast
Bankinter, one of Spain’s leading financial institutions, has raised its forecast for house price growth in 2026 to 7%, up from its previous estimate by three full points. The revision underscores the persistent mismatch between growing demand and lagging housing supply—a dynamic propelling Spain property prices ever higher.
Key Insights
- 7% House Price Growth: As demand continues to outstrip supply, property prices are primed for significant gains in 2026.
- Supply Deficit Impact: The upward trajectory is likely to continue in the absence of policies or market forces significantly boosting housing construction.
This trajectory aligns with broader European and global trends, where limited supply—combined with robust demand—creates persistent upward pressure on residential property values.
The Widening Housing Deficit: Facts and Projections
Spain’s housing deficit currently stands at approximately 700,000 properties. According to Bankinter, this gap is set to increase by more than 150,000 homes each year, as the creation of new dwellings remains stubbornly insufficient.
Deficit Outlook for the Next Decade
- Current Deficit: 700,000 homes
- Annual Increase: >150,000 homes
- New Construction: 200,000 homes/year
- Foreign Purchases: +50,000 homes/year
- Projected 10-Year Deficit: Over 2,000,000 homes
This persistent shortage is exacerbating pressures in both sales and rental markets, setting the stage for further price growth and social challenges, especially among young and first-time buyers.
Supply, Demand, and the Pace of Construction
The so-called “inertia” of the real estate sector—the lag between demand signals and new housing supply delivered to the market—is a defining feature of the Spanish market. Construction timelines are lengthy, and despite the annual creation of approximately 200,000 new homes, this falls short of offsetting increasing demand and population growth.
Experts at Bankinter highlight that due to these long development timelines, it will be at least another three to five years before any substantial relief in the supply-demand imbalance is felt. In the meantime, property prices and rents are set to climb further.
The Rental Dilemma: An Unviable Option for Many
For many Spaniards, renting is no longer a feasible alternative to buying. The “effort rate”—the percentage of a household’s income devoted to rent—now exceeds 50% for a large number of buyers and renters alike.
Rental Affordability Crisis
- Effort Rate: >50% of disposable income (renters)
- Historical Comparison: 55% effort rate during the 2007 property boom
- Lack of Supply: Intensifying competition for rental units, especially in urban centers
In major cities and tourist hotspots, insufficient supply and robust demand from both domestic and foreign buyers have pushed rents to historic highs. Bankinter notes that despite these pressures, overvaluation remains “moderate and sustainable,” provided supply issues are not worsened.
Price Overvaluation: Then and Now
One of the critical questions for any housing market watcher is the degree of overvaluation. Compared to the 2007 bubble, the situation is notably different.
Comparing 2026 to the 2007 Peak
- Current Prices: 25% higher than 2007 peak levels
- Household Disposable Income: Increased by 36% since 2007
- Real Terms: House prices are actually 10% lower than the previous cycle’s peak
This suggests that, while housing is more expensive on paper, income-adjusted affordability hasn’t reached dangerously unsustainable levels. The risk profile, therefore, is fundamentally different from the pre-crisis era.
The Growing Influence of Foreign Buyers
Foreign demand is a major—and growing—force in the Spanish housing market. Bankinter’s report confirms that international buyers are responsible for about 20% of all home transactions in Spain, with the rate surpassing 40% in hotspots like Alicante, Tenerife, Malaga, and the Balearic Islands.
Reasons for Foreign Demand
- Higher Purchasing Power: Foreign buyers are able to pay 80% more than domestic buyers, on average.
- Lifestyle and Investment: Spain’s climate, lifestyle, and relative affordability draw retirees, digital nomads, and investors alike.
- Prime Locations: Coastal cities and islands are particularly attractive, driving some of the largest price increases.
The influx of foreign capital is further tightening supply, particularly in popular regions, and skewing prices upwards well above what many locals can afford.
Regional Disparities: Where Demand Is Highest
While the market is sizzling nationwide, certain regions are experiencing particularly acute pressure from both domestic and international demand.
High-Demand Regions
- Alicante
- Tenerife
- Malaga
- Balearic Islands
In these areas, foreign buyers outnumber locals in transactions, resulting in sudden price surges and posing additional challenges for resident affordability.
Outlook for Other Real Estate Assets
Residential property is not the only segment seeing rising investor interest. The Bankinter report points to a “favorable environment” for other real estate asset classes, especially traditional ones—offices and shopping centers—whose valuations had previously suffered.
Drivers of Renewed Investment Appeal
- Moderate Economic Growth: Helping bolster occupancy rates.
- Stable Interest Rates: Both in Europe and in the U.S., with some declines expected in the latter.
- Low Inflation: Projected at around 2%, keeping real estate attractive as a hedge.
- Post-Covid Rebound: Offices and commercial spaces are recovering, with rents now rising faster than inflation.
The report adds that some investors, wary of sectors negatively impacted by rapid advances in artificial intelligence (AI), are redirecting resources into stable, yield-producing real assets.
Impact of Economic and Global Factors
Macroeconomic stability is a significant factor supporting both housing markets and other real estate assets. With the European Central Bank indicating stable monetary policy, and the U.S. Federal Reserve starting to cut rates, financing remains relatively accessible.
Other Influential Trends
- Demographic Shifts: Population growth, urbanization, and household fragmentation are sustaining demand.
- International Mobility: Post-pandemic, remote work and lifestyle changes are driving a fresh wave of foreign buyers and digital nomads.
- Investment Diversion: Institutions are diversifying away from technology and dollar-denominated assets due to volatility, placing greater emphasis on real assets in stable currencies like the euro.
Recommendations for Investors and Homebuyers
Given these market realities, Bankinter maintains a “Buy” recommendation for European property, especially traditional real estate within the region and without exposure to currency risk.
What Should Buyers and Investors Consider?
- Timing: The window for capitalizing on price appreciation remains, but investors should be mindful of potential policy or tax changes aimed at curbing speculation or addressing affordability.
- Location: Emphasize regions with supply bottlenecks but sustained demand—prime urban and coastal markets.
- Asset Type: Consider diversification into commercial real estate assets, which may offer strong yield amid rebounding rents and occupancy.
- Funding & Leverage: With rates stable or falling, attractive financing options are likely to persist, but prudent leverage is essential.
Spain property prices are poised for significant growth through 2026 and beyond, as illustrated by Bankinter’s upwardly revised forecast. The country’s enduring supply shortage, fueled by insufficient construction and surging demand from both locals and foreigners, is likely to ensure continued price appreciation and fierce competition—especially in prime locations.
Meanwhile, chronic rental unaffordability and modest overvaluation should keep policymakers and investors vigilant, even as the market overall stays clear of a 2007-style bubble. For those seeking long-term value, both residential and select commercial assets in Spain and across Europe present opportunities—but with risks that demand careful consideration.
As always, the best strategies in a dynamic market like Spain’s will require close attention to changing supply, demand, policy, and international trends.
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