The Spanish real estate market continues its upward trajectory, posting record-high prices and a brisk pace of activity, according to fresh forecasts from the Real Estate Credit Union (UCI). Despite growing concerns over affordability and limited supply, both purchase and rental prices are set to see further increases through 2026.
Sales Volumes and Rising Demand
By 2025, property sales in Spain are expected to exceed 780,000 transactions, but new construction will account for only about 110,000 of these. Remarkably, UCI predicts that 38.5% of total home purchases—around 300,000 operations—will be made without any financing, showing the influence of cash buyers in the market. The rest will continue keeping the mortgage sector active, with an anticipated 480,000 new mortgages signed.
High demand, coupled with a persistent lack of available homes, will continue to push prices higher—albeit at a slightly slower pace than in previous years. By the end of 2024, the average house price is expected to rise by 10-12%, and in some areas, announced prices are up by as much as 16%.
Hotspots: Major Cities and the Coast Continue to Lead
Madrid, Barcelona, Valencia, and Malaga, along with popular coastal areas, will see the sharpest price increases thanks to strong national and international demand. These regions are reaching all-time price highs, as both local and foreign buyers compete for limited stock. New interest is also emerging in northern regions such as Galicia, Asturias, and Cantabria, broadening the map of sought-after locations.
2026 Outlook: Easier Growth, Persistent Shortage
Looking ahead to 2026, UCI projects that price growth will moderate to between 5% and 8%, and rent increases will settle between 7% and 10%. However, these “softer” increases will still be most pronounced in high-demand zones like major cities, well-connected municipalities, and hotspots for international buyers.
Driving this trend is the persistent time lag in new housing supply. UCI estimates that at least 250,000 new homes would need to be built each year to balance the market and address Spain’s current housing deficit, which the Bank of Spain puts at about 700,000 units. In reality, construction is only expected to deliver around 120,000 units annually, leaving the gap largely unaddressed.
Rentals Remain Under Pressure
The rental market shows no signs of cooling off, with prices forecast to rise by up to 10% by 2026. The scarcity of available rental units, increasing migration to urban areas, more citizens opting for rental living (now at 20%), and limited affordable housing production are all colliding to create a “perfect storm” of upward pressure on rents.
Build-to-rent (BTR) strategies and increased public-private collaboration are seen as crucial tools to expand the rental supply and make housing more accessible, but these measures are yet to scale up to the level the market needs.
Mortgage Market & Financing Trends
Stable interest rates mean fixed and mixed mortgages will dominate, while variable-rate loans will increasingly be reserved for highly qualified buyers with short-term borrowing needs. By 2026, over 500,000 new mortgages are expected to be signed, reflecting a healthy but competitive lending environment. The Euribor is forecast to remain between 2% and 2.5%.
Foreign Buyers: Diversification on the Rise
International interest in Spanish property remains robust. While British and German buyers continue to play leading roles, there’s growing interest from Nordic countries, the US, Latin America, and France, further widening the international profile of Spain’s buyers. Notably, even lesser-known regions, such as Galicia, Asturias and Cantabria, are catching the eyes of foreign and Spanish buyers alike.
No Relief in Sight for Housing Shortage
Despite expectations for more moderate price increases, Spain’s housing market will remain tight through 2026. Substantial new construction and sensible policy interventions are needed to address the supply shortfall and rising costs—a challenge that remains at the top of the national agenda.
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