S&P predicts a 4.5% rise in Spain real estate prices by 2025, exceeding the European average as the real estate market accelerates its recovery.
In a recent analysis by S&P Global Ratings, the trajectory of Spain real estate prices is projected to undergo a moderation in 2025, with an anticipated growth rate of 4.5%. This forecast positions Spain above the broader European average, which is expected to see a modest increase of nearly 3% annually from 2025 to 2027. The rapid recovery of Spain’s real estate market, catalyzed by unique idiosyncratic factors, has significantly influenced this outlook.
The report elucidates that after a pronounced surge in housing prices throughout 2024, driven by improved housing affordability, the upward momentum will temper in the subsequent years. Specifically, S&P anticipates increases of 3.5% in 2026 and 3% in 2027, reflecting a more measured pace following the previous year’s vigorous recovery.
Among the salient findings of this study is the observation that nominal house prices across major European nations rebounded swiftly in 2024. This rebound was attributed to a confluence of factors, including limited housing supply, subdued investment in the sector, and a resurgence in demand. Notably, the credit rating agency highlighted that the recovery in housing markets was “faster and more pronounced” than initially projected, particularly in countries such as Italy, the Netherlands, Ireland, and Spain.
S&P Global Ratings further elaborated that the limited supply of housing, compounded by labor shortages, continues to constrain market dynamics, despite some reported improvements from companies in the sector. Concurrently, the demand side of the equation is bolstered by rising household incomes, population growth—especially in urban locales—record employment levels across most European economies, and a decline in household indebtedness.
In the context of Spain, these dynamics are particularly salient. The nation boasts one of the lowest levels of household mortgage debt in Europe, trailing only Italy, while the robustness of the Spanish labor market has not only enhanced household incomes but has also significantly improved housing affordability. Thus, as we gaze into the crystal ball of Spain’s real estate market, it appears poised for a period of tempered growth, underpinned by a complex interplay of economic factors that continue to shape the landscape.