Find out how Spain’s housing deficit, concentrated in tourist hotspots and densely populated areas, explains up to 39% of recent Spain’s real estate prices increase, according to CaixaBank Research.
Spain’s Real Estate Prices Surge in 2025 as Housing Shortage and Foreign Demand Intensify
Spain’s real estate prices are making headlines again in 2025, as the combination of a significant housing deficit, strong demographic pressure, and all-time high foreign demand sends both prices and transaction levels soaring across the country.
Housing Shortage Explains Soaring Prices
A new CaixaBank Research report reveals the critical impact of Spain’s housing shortage on current market prices. According to the study, the accumulated housing deficit over recent years can account for up to 39% of the surge in property prices. Without this deficit, Spain’s property prices would have grown at a more sustainable rate of 3.7% per year—substantially lower than the 6% annual increase actually observed.
The shortage is especially acute in high-demand provinces including Madrid, Barcelona, Alicante, Valencia, and Malaga, where population growth and tourism are strongest. In contrast, so-called “emptied Spain” — areas with shrinking populations — sees a much smaller deficit.
The report quantifies the accumulated shortfall at:
- 515,000 homes over the past 4 years (based on permits),
- 600,000 homes when considering only finished properties,
- And up to 765,000 homes when adjusting for alternative property uses.
Demand Booms: The Market’s Expansive Phase
Following a pandemic-era slowdown, Spain’s real estate market is now experiencing a robust rebound. Demand, reactivated in late 2024, has fully consolidated in 2025 with:
- 700,000 home sales in the 12 months to June—a 19.7% jump compared to the previous year’s first half.
Key drivers include:
- Improved financing conditions from banks,
- Rising household purchasing power,
- Sustained demographic growth, especially in large urban and tourist provinces.
Construction Sector Recovery
There’s a positive signal from the supply side as well; over the last year (to May 2025), 132,000 new homes have been approved, representing a 13% year-on-year increase. However, this pace is still insufficient to close the housing gap, especially in the hottest markets.
Record-Breaking Foreign Demand
Foreign citizens continue to play a pivotal role:
- 18% of home purchases in the last 12 months up to Q1 2025—a record-breaking 133,000 sales.
- More than half were made by foreign residents in Spain, with non-residents (often high-net-worth investors) accounting for 44%.
These buyers show a strong preference for upper-middle and high-end properties, particularly in the Mediterranean provinces and the islands. Notably, markets like Castellón, Asturias, Huelva, and Córdoba are also seeing an uptick in foreign attention, broadening Spain’s traditional hotspots.
Urgent Call for Residential Development
CaixaBank Research’s report underscores the pressing need to reactivate significant residential development to relieve price pressures. Without a rapid and coordinated response from the construction sector, housing affordability could worsen in Spain’s most vibrant provinces.
Key Takeaways
- Housing deficit explains 39% of home price inflation in Spain.
- Spain’s real estate prices rose 6% per year—much faster than if supply kept up with demand.
- Mediterranean and urban provinces (Madrid, Barcelona, Alicante, Valencia, Malaga) are most affected by shortages and price spikes.
- 700,000 home sales recorded (June 2024–June 2025), up 19.7%.
- Foreign buyers account for a record 18% of transactions, driving up prices in premium segments.
- Urgent action to boost residential construction is needed to stabilize the market.
Stay updated on Spain’s real estate prices and market trends to make informed decisions as buyer or seller in this dynamic and evolving landscape.
