Spain’s real estate market ends 2025 on a high note—at least for sellers—with average home prices reaching close to €2,000 per square meter. According to the latest Gesvalt report, average prices hit €1,963 per m² by December, reflecting a year of relentless increases that now approach historic highs. The boom has made buying a home significantly more expensive: the average cost for a typical 90 m² flat now stands at €176,670—up by more than €23,000 compared to a year ago.
Rapid Price Increases Outpace New Supply
The year-long surge isn’t a one-off spike. Instead, prices accelerated throughout 2025: annual growth rose from 10.3% in Q1, 12.7% in Q2, 13.8% in Q3, to a striking 15.4% in the final quarter. This sustained pace highlights an imbalanced market fuelled by robust demand and insufficient supply.
While construction permits for new homes jumped 7.6% (115,279 approvals from January to October), completed properties lagged far behind. Only 73,788 homes received final building certifications—a 10.6% drop year-on-year—underscoring a growing disconnect between housing starts and move-in ready homes. This gap continues to drive up prices, as new supply simply can’t meet market demand.
Regional Differences: Where Prices Jumped the Most
Price hikes were seen across the country, but some areas faced bigger jumps than others. Murcia led the way with an 18.7% increase, closely followed by Madrid (18.4%), Cantabria (17.7%), and Asturias (16.2%). Southern and coastal regions like Andalusia (15.2%), the Valencian Community (13.6%), and the Canary Islands (11.9%) saw double-digit growth as well.
Meanwhile, increases were far milder in places like Extremadura (2.8%), Navarre (4.0%), and La Rioja (4.2%). In absolute terms, the Balearic Islands remained the priciest region at €3,371 per m², ahead of Madrid (€3,234) and the Basque Country (€2,691). Extremadura is the only region where you can still find prices below €1,000 per m².
Big Cities Lead the Way
A deeper look at Spain’s cities shows significant polarization. San Sebastián tops the ranking at €4,861 per m², trailed by Madrid (€4,350) and Barcelona (€4,107). Other major urban centers—including Palma, Málaga, Bilbao, Cádiz, Valencia, and Seville—all surpass €2,000 per m², highlighting the widening gap between major cities and more affordable regions.
Mortgage Activity Climbing Despite High Prices
Surprisingly, despite the sharp rise in prices, mortgage lending grew rapidly. From January to September 2025, there were 367,715 new mortgages—22% more than during the same period in 2024, outpacing home sales growth. This trend signals a heavier reliance on bank financing and greater financial commitment from households.
Foreign Buyers Take a Back Seat
One notable shift: foreign buyers are slowing down. Transactions by non-residents represented 16.8% of all home purchases—a 6.6% decrease from the previous year (18.5%). While international demand remains strong in hotspots like the Balearic Islands, the Valencian Community, and the Canary Islands, Spanish nationals are once again dominating the real estate market.
Demand Strong, Affordability Challenging
2025 wraps up with Spain’s residential market showing strong demand and firm prices, but affordability remains a central concern. With supply still lagging and regional disparities widening, the trend leaves many prospective buyers facing higher entry barriers and a tougher path to home ownership in the years ahead.
