Spain’s housing market heats up: national average prices +13.5%, cheap neighbourhoods up to +55% and luxury areas exceeding €20,500/m². Supply shortage fuels concern.
Spain’s residential real estate market is showing signs of acute stress as price growth broadens beyond elite pockets and surges through historically affordable neighbourhoods. According to the latest maximum and minimum price report from Grupo Tecnitasa, the national average house price rise has accelerated to 13.5% year-on-year — more than double the increase seen in the previous edition — and the steepest gains are now appearing in lower-cost areas.
Luxury addresses continue to break records. Madrid’s Recoletos tops the list at over €20,500 per square metre after an almost 8% rise, followed by Puente Romano in Marbella and Nou Llevant–Portixol in Palma, both above €17,000/m². Barcelona’s Paseo de Gracia sits around €10,900/m², while San Sebastián approaches €9,600/m². In total, nine Spanish cities now report prime-area prices above €6,000/m² — territory that until recently seemed out of reach for most buyers.
The striking and more worrying development is that the fastest increases are happening at the bottom of the market. Tecnitasa’s data show that minimum prices under €500/m² have vanished from capitals and large municipalities. Ponferrada is now the cheapest city in the study at €520/m² (+8.3%). More extreme shifts are visible in Granada, where minimum prices in neighbourhoods such as La Cartuja and El Caserío jumped about 55% (from €550 to €850/m²) in just one year.
The Madrid metropolitan ring is also seeing dramatic moves: Fuenlabrada and Móstoles have recorded rises close to 50% in their cheapest areas, where prices are already near €2,000/m². Other cities with double-digit jumps in their lowest-price brackets include Zamora, Santiago de Compostela, Huelva, Torrent and Logroño — many above +30% year-on-year. A few pockets, such as Jaén, Reus and Ourense, show isolated declines, but they are the exception.
Why prices are racing upward
Tecnitasa attributes the shifts to a clear fall in supply and a displacement of demand toward traditionally affordable neighbourhoods. When budget-friendly flats are listed, they often “barely last a few days or sell almost immediately,” the report notes. This scarcity pushes buyers to look outside prime locations, increasing competition in lower-cost suburbs and smaller cities and driving sharper percentage rises there than in already expensive districts.
Is a bubble forming?
Fast, widespread price growth raises legitimate concerns about overheating. Key bubble indicators to watch include continued sharp price acceleration, speculative buying, loosening lending standards, and a sizeable mismatch between incomes and housing costs. Today’s picture — falling supply, strong demand and rapid gains even in cheap areas — increases vulnerability, but whether it becomes a systemic bubble depends on future interest-rate moves, mortgage lending behavior, and whether new supply comes online to absorb demand.
What this means for buyers and policymakers
For buyers on modest budgets, options are shrinking and affordability is worsening even in once-cheap neighbourhoods. Investors may see opportunity in rising rents and capital values, but market risk is higher if conditions change. Policymakers face growing pressure to boost housing supply, streamline development, and consider targeted measures for affordable housing to prevent social strain as prices escalate across the country.
