Real Estate Prices in Spain: Fastest Growing Areas Revealed

Discover the regions in Spain where real estate prices are surging. Uncover trends and insights in the booming real estate market today.

Real estate prices in Spain are experiencing a meteoric rise, as demand continues to outstrip supply, leaving many scratching their heads in disbelief. According to a report by BBVA Research, since 2019, only the Balearic Islands have outpaced Andalucia in terms of price increases. The ‘Real Estate Observatory 2024’ reveals that both new and existing homes have surged in price by just over 20% since 2019. However, despite this impressive boom, BBVA estimates that current prices have yet to reach the dizzying heights of the previous real estate bubble from two decades ago. Presently, prices remain 8% lower for new homes and 10% lower for used homes compared to those peak levels—only Madrid and the Balearic Islands have managed to surpass the prices seen in the 2000s.

The Canary Islands have emerged as the star performer, boasting a staggering 16.4% increase in house prices over the past year, according to the latest report from idealista. This is closely followed by the Balearic Islands (11.9%), the Valencian Community (11.5%), the Community of Madrid (11.5%), the Region of Murcia (8.8%), and Andalucia (8.7%).

When examining the provinces, a remarkable forty-five have reported higher prices compared to a year ago, with Santa Cruz de Tenerife leading the charge at an impressive 18.6% increase in seller expectations. Las Palmas follows suit at 13.5%, then Malaga at 12.2%, the Balearic Islands at 11.9%, the Community of Madrid at 11.5%, and Alicante at 11.3%.

In the realm of cities, Malaga takes the crown with a notable 18.2% rise in seller expectations, trailed closely by Alicante (18%), Soria (17%), Valencia (16.1%), Santander (15.6%), and Madrid (15.5%). Major markets, aside from Málaga, Alicante, Valencia, and Madrid, have also seen price increases in Palma (8.9%), Barcelona (8.2%), Seville (7.3%), Bilbao (6.3%), and San Sebastián (5.1%). On the flip side, Melilla (0.3%) experienced the smallest increase, followed by Pamplona (1.1%), Palencia (1.8%), Vitoria (2.1%), and Pontevedra (2.4%).

With this upward trend, the price per square meter in Madrid now stands at €4,622, while Barcelona follows closely at €4,477. Across Spain, house prices rose by 3.9% in 2023 and 4.3% in the first quarter of 2024, with forecasts predicting a 5% increase in 2024 and 4.7% in 2025. Key factors propelling this trend include a booming economy, rising family incomes, foreign demand, and lower interest rates. The Balearic Islands command a price of €4,445 per square meter, followed by the Community of Madrid at €3,504. The Basque Country (€2,945), the Canary Islands (€2,636), and Catalonia (€2,397) follow suit, while the most affordable regions are Castilla-La Mancha (€939), Extremadura (€976), and Castilla y León (€1,198).

In a striking development, the average price of an existing home reached a record €2,153 per square meter in July—a 7.9% increase compared to the same period last year, according to idealista. Despite the Spanish authorities’ fervent efforts to construct new homes, supply is still anticipated to fall short of meeting the burgeoning demand. BBVA forecasts 120,000 construction permits in 2024, an increase of 10,000 from the previous year. The first four months of 2024 witnessed a 14.8% growth in permits compared to the same period last year, indicating the onset of a new construction cycle fueled by heightened demand and increased interest from local authorities. However, challenges such as zoning issues, labor shortages, and regulatory uncertainty continue to impede new projects, leaving many to wonder if the Spain real estate market will ever catch up with the relentless demand.