Over 50% of home sales in Spain were cash deals by investors, fueling rising house prices and making property less accessible for local buyers. Discover how speculative demand is influencing Spain real estate trends and pushing housing affordability further out of reach.
Spain Real Estate Trends: House Prices Near Bubble Levels—Why Are People Still Buying in a Soaring Market?
The Spanish housing market is making headlines once again, as house prices are fast approaching levels last seen before the 2008 real estate bubble burst. While the Spanish economy is showing robust growth according to recent reports, Spain real estate trends reveal a sector facing heightened stress, risk, and inequality.
House Prices Soar Close to Bubble Territory
Official figures confirm that house prices in Spain have been on a relentless rise since 2015. Over the past five years, home values have climbed 19%. Taking the last decade as a reference, that growth jumps to 35%. Even more concerning, statistics from Spain’s National Institute of Statistics (INE) highlight an astonishing 70% price increase over the past ten years.
In the second quarter of 2025, the average price of free housing hit €2,093.5 per square meter—the highest since 2008. The INE also reported a 12.7% year-on-year price spike between April and June, marking the steepest increase in nearly two decades.
Surge in Mortgage Signings and Evictions
This sharp rise in prices isn’t deterring buyers—in fact, it’s having the opposite effect. Mortgage signings have soared 25% compared to last year, buoyed by recent interest rate cuts from the European Central Bank (ECB). In just the first six months of 2025, over 243,000 home loans were issued, the largest figure Spain has seen in recent memory.
But there’s a darker side: evictions due to unpaid mortgages have also jumped, climbing 27.8% in the second quarter. So far in 2025, more than 7,500 evictions have been registered—a sobering 15.5% more than in the first half of 2024.
Why Do People Keep Buying At Peak Prices?
Amid warnings that the market is being artificially inflated by speculative investments and easy credit, many buyers are still rushing in. Experts point out that lower interest rates make borrowing more attractive, but this also fuels further price hikes.
Spain’s real estate trends show the real driver behind runaway prices: a persistent shortage of housing stock. Construction can’t keep up with demand, with new developments often taking 6-8 years from planning to completion.
Speculation fuels the fire. Over half of home purchases in the past decade have been made in cash, with investors pouring money into property to safeguard and grow wealth, not to secure a home to live in. This speculative demand, combined with high returns on housing as an asset, leads to more people and institutions amassing multiple properties—creating a cycle that drives prices ever higher.
As a result, many ordinary Spaniards are being priced out, particularly young people. Recent calculations reveal it could take up to 20 years of savings for a young person to buy their first home.
Rental Market: From Stressed to “Trap”
As buying has become unattainable for many, the rental sector is now equally out of control. For the first time, rents are matching or surpassing mortgage payments. Barcelona’s average monthly rent is now €912, while Madrid has reached an eye-watering €22.2 per square meter.
Room rentals are also breaking records, with an average price per room of €476, up 12.5% from last year. The Spain real estate trends indicate an alarming rise in inequality, as large investors profit and average citizens spend a rising share of income on housing.
What’s Next for Spain’s Real Estate Market?
Despite the warnings, experts don’t predict an imminent crash. Unlike 2008, demand remains strong, driven by investment rather than sheer necessity. As long as speculation remains profitable and supply stays limited, prices are set to continue their upward march.
However, the market’s underlying fragility is clear. The increasing reliance on debt, the surge in evictions, and the growing divide between property owners and renters all point to deep structural challenges. Without solutions to increase affordable supply or curb speculative demand, Spain seems destined for an ever-tighter housing squeeze—one that may eventually test the limits of the market itself.
Spain’s real estate is at a crossroads. With Spain real estate trends showing historic highs in both sale and rental prices, and inequality becoming more pronounced, experts warn of an ongoing cycle rather than a short, sharp crisis. For now, the market may avoid the kind of dramatic collapse seen in 2008, but the pressure on Spanish families and young buyers continues to build. The question that remains: will change come before the system reaches breaking point?
