Spain | Real Estate Watch. May 2025

Summary

Economic growth will continue to support the dynamism of the real estate sector in the coming months. The decline in interest rates, the strength of the labor market, and positive net migration will sustain strong demand in 2025, although it is expected to decelerate in 2026 as a result of slower economic growth.

Key points

• Key points:
• Economic activity in Spain is expected to grow by 2.8% in 2025. In 2026, growth is projected to slow to 1.8% due to rising geopolitical tensions and increased uncertainty surrounding trade policy.
• Home sales grew by 11.7% in 2024 and have maintained this trend in early 2025. It is inferred that individuals aged 30 to 49 and those in higher income brackets were the main drivers of the increase in purchases.
• Building permits in 2024 recorded a year-on-year increase of 16.7%. Although the growth rate is high, the overall level remains relatively low. Labor shortages and lengthy land development processes, among other factors, may be constraining the initiation of new projects.
• Housing prices continue to follow an upward trend due to limited residential supply in certain geographic areas. Price growth intensified in 2024, with the annual average increasing by 5.8% compared to 2023. However, in real terms, prices remain well below the 2008 peak.
• Home sales are expected to grow by approximately 9.0% in 2025 and by 5.0% in 2026. Building permits are projected to increase by around 16% in 2025 and 13% in 2026. Meanwhile, housing prices are forecast to rise by 7.3% in 2025 and 5.3% in 2026.

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