Spain Real Estate Market: 3% Growth Forecast by 2025

Solvia forecasts a 3% increase in Spain's housing prices and sales by 2025, driven by rising residential demand. Discover the insights here.

The Spain real estate market is poised for a notable surge in demand, accompanied by anticipated price escalations. Recent trends indicate that as the market braces for potential interest rate reductions, various projections are undergoing revisions, including a significant analysis from the esteemed real estate services firm, Solvia. Their latest research posits that while property sales may experience a downturn this year, a resurgence is expected in the following year, with prices forecasted to ascend by approximately 3% in both 2024 and 2025.

The report further elucidates a projected uptick in new building permits and rental activities. Notably, in the second quarter of 2024, Spain's real estate landscape witnessed a contraction in transaction volumes and new mortgage agreements, juxtaposed with a modest rise in purchase prices and a pronounced escalation in rental expenses. This prevailing trend is anticipated to endure throughout the remainder of the year. The forecasts suggest a year-on-year contraction in transactions ranging from 4% to 5% by 2024. However, Solvia remains optimistic, predicting a rebound in demand by 2025, with sales and purchases projected to grow between 2% and 3%.

On the subject of mortgages, Solvia articulates that "should interest rates continue their downward trajectory, a more accessible credit environment could materialize, thereby attracting a new clientele." Nonetheless, the report underscores that "supply remains exceedingly constrained and is gradually diminishing," implying that the year may culminate in a slight decline in new mortgage contracts. The platform anticipates a moderate yet consistent increase in property prices, forecasting that 2024 will conclude with an average rise of 3%, a trend expected to perpetuate into the subsequent year.

The report also highlights that average prices have surpassed €2,000 per square meter in the second quarter, with the Balearic Islands, Guipúzcoa, and Madrid spearheading the market, each exceeding €3,000 per square meter. Major valuation agencies and economists echo this sentiment, projecting a rise in house prices in the forthcoming months.

Turning to the Spain rental market, the forecast suggests an average rent increase exceeding 10% this year, propelled by robust demand and constrained supply, further exacerbated by price caps. According to idealista, rental prices in Spain reached €13 per square meter per month by the end of the third quarter, reflecting a year-on-year increase of 10.2%.

Moreover, Solvia's projections anticipate an increase in new building permits ranging from 6% to 8% by year-end. The latest data from the Ministry of Housing and Urban Agenda (MIVAU) reveals year-on-year increases of 27% from January to July, culminating in over 75,800 units. Notably, July alone witnessed the granting of more than 12,500 permits—the highest figure recorded since late 2008.