Spain’s housing market is heading into 2026 with no sign of relief for buyers or renters, as experts forecast another year of price increases fueled by a persistent lack of housing supply. While the rapid growth of recent years is set to slow somewhat, industry analysts widely agree: Spain’s real estate prices will hit new record highs next year—just not at the breakneck pace seen in 2025.
2025 Sets Records Across the Board
Preliminary data for 2025 points to an extraordinary year. According to the latest figures, the average price of free housing soared by 12.1% compared to the previous year, reaching €2,153.4 per square meter—the highest in the statistical series dating back to 1995. This widespread growth has touched every region and city in Spain, with more than half of all areas posting double-digit growth.
Meanwhile, transactions have surged as well. Housing sales in 2025 are expected to surpass 700,000 deals, up 10% compared to the previous year. While investors remain active, most market activity now comes from individuals and families eager to buy, signaling a more balanced but still highly competitive environment.
2026 Outlook: Prices Up, Supply Stays Tight
Looking to 2026, the consensus is clear: The housing shortage isn’t going away, and competition for available properties will remain fierce. Projections from renowned real estate platforms like pisos.com estimate home sales will climb again by nearly 5%, reaching approximately 744,000 transactions.
But what about prices? Analysts expect increases to slow down, with average growth pegged at 3–4% for 2026. While this marks a stark drop from 2025’s double-digit leaps, it means new all-time price highs are still on the horizon. Some experts see slightly higher increases of around 7–8% in the most overheated markets, unless supply rises significantly—a scenario not expected in the coming year.
Mortgages: Fixed Rates Dominate as Costs Inch Up
Spain’s mortgage market remains robust—2025 saw nearly half a million new mortgage agreements, fueled in part by historically low interest rates after the European Central Bank’s (ECB) cuts pushed the 12-month Euribor down to about 2.2% at the end of the year. This made Spanish mortgages among the most competitive in Europe.
However, that window may be closing as inflation persists and rate cuts slow. Expectations are for moderately higher mortgage rates in 2026: Fixed rates, currently around 2.23%, could inch up to between 2.5% and 2.75%. This slight rise is likely to make fixed-rate mortgages even more attractive for buyers seeking stability.
While some banks will continue to offer attractive deals to catch new business, overall lending standards are expected to become stricter. Most mortgage holders have the ability to meet monthly payments, but rising home prices and high upfront costs can keep new buyers on the sidelines unless they have enough savings for a down payment.
Rental Crisis: Growing Pressure on Young People and Families
The situation in the rental market remains especially tough. Rents are forecasted to climb another 7% in 2026, pushing the average cost of an 80 sqm apartment to €1,150 per month. This makes renting virtually unaffordable for many, with the average household already spending over 47% of its income on rent—well above the 30% recommended by financial authorities.
Young people and low-income families are among the hardest hit, with no signs of improvement on the horizon without significant policy intervention or a surge in affordable housing.
Is Spain Headed for Another Bubble? Experts Say No
The sustained rise in prices has sparked worries about a repeat of Spain’s infamous real estate bubble. However, property and banking experts unanimously dismiss this comparison, noting that today’s market fundamentals—strict lending criteria, healthier buyer profiles, and careful bank risk assessments—are much stronger than in the past.
Instead, the bigger concern is the drag on the overall economy and social mobility. Both the European Commission and the Bank of Spain have flagged housing affordability as a major risk, urging government action to expand affordable and public housing to EU-average levels.
New Initiatives and Government Response
In December, the Spanish government approved Casa47, an initiative aimed at offering affordable rentals for up to 75 years, hoping to alleviate some of the ongoing pressure. Meanwhile, sector advocates have criticized certain aspects of the housing law, calling for a more balanced, consensus-driven approach to address both ownership and renting challenges.
Bottom Line: Competition Remains, Action Needed
All signs point to 2026 being another tough year for those seeking to buy or rent in Spain. Prices will keep climbing, albeit more slowly, until supply catches up with demand. For homebuyers and renters alike, staying informed and acting promptly remains more important than ever.
Stay tuned to our Real Estate section for updates on Spain’s housing market and practical tips for navigating this challenging environment.
