Spanish house prices jumped 13.1% year-on-year in Q4 2025, with Madrid, Valencia, and the Balearic Islands leading the surge. Find out what’s behind the boom and what to expect in 2026.
As 2025 draws to a close, Spain’s real estate market is hotter than ever, with average house prices nationwide up a striking 13.1% compared to a year ago. The average price for both new and second-hand homes now stands at €2,091 per square meter, according to the latest market data—a 3.5% rise over the previous quarter alone, and 10% higher than last year even when accounting for inflation.
Record-Breaking Growth in Madrid and Coastal Regions
Much of the momentum is being driven by Spain’s traditional economic and tourism powerhouses. Madrid leads the surge with house prices climbing an impressive 19.6% year-on-year. Close behind are Valencia (+15.9%), Cantabria (+15.8%), and the Balearic Islands (+14.1%). Tourist hotspots and employment hubs continue to attract strong demand from both domestic and international buyers.
On the other end of the spectrum, price growth has been far more subdued in Ceuta and Extremadura, where gains were under 5%.
A Year of Accelerating Gains
The 2025 price increase is about three times the average annual gain recorded in 2024, which stood at just 3.5%. Notably, much of this growth was concentrated in the second half of the year—a sign that demand has intensified recently, particularly as mortgage costs have stabilized and Spain’s robust employment market underpins buyer confidence.
Since bottoming out in the summer of 2015, Spanish housing prices have staged a remarkable recovery, rising almost 64%. However, even at current high levels, prices are still 3.3% below their late-2007 peak. Adjusted for inflation, the average price remains 33% below the pre-crisis record, but is now a hefty 29% above the 2015 low.
Buyers Still Active, But Affordability Remains in Focus
Despite double-digit price growth, Spanish households are—so far—managing to keep pace. Mortgage costs have moderated in recent years, and purchasing a home now requires around 34% of disposable income, a figure considered sustainable by industry standards. However, as residential prices outpace inflation, there are early signs that this balance could begin to shift if wages and credit conditions fail to keep up.
2026 Outlook: Gradual Stabilization, Continued Shortages
What’s next for Spain’s dynamic property market? Forecasters predict demand will stabilize at today’s high levels as interest rates remain steady (around 2%), supported by job growth and a gradual normalization of savings rates after recent economic uncertainty.
Crucially, the main challenge ahead remains a shortage of available housing. With supply still not meeting demand, experts expect residential prices to continue climbing by 5% to 10% in 2026—even as market activity levels out. Government measures to boost new construction and ease bottlenecks could help, but relief for buyers may be limited in the near term.
Bottom Line
Whether you’re a first-time homebuyer, a property investor, or simply keeping an eye on Spain’s real estate trends, the message is clear: competition is fierce, prices are rising fastest in Spain’s most desirable regions, and supply continues to lag far behind demand. All eyes will be on 2026 to see if market momentum finally slows—or if another year of rapid growth is in store.
