Spain | Real Estate Watch. November 2025

Summary

The real estate market in Spain continues to be affected by a lack of supply. The shortage of labor, lengthy land development processes, and regulatory uncertainty, among other factors, are reducing the sector’s profitability and, therefore, limiting investment. As a result, prices continue to rise sharply.

Key points

• Key points:
• The determinants of housing demand remain solid. Economic growth will encourage job creation and wage increases, interest rates will remain at relatively low levels, and the number of new households will continue to grow.
• The pace of construction is insufficient to meet the unmet demand accumulated between 2021 and 2025 (625,000 households).
• The lack of affordable supply may limit the growth of sales, which are expected to increase by 1.8% on average in 2025 and to stagnate in 2026 (-0.3%). New housing construction will grow (10% in 2025 and 12% in 2026), but this will be insufficient and will not prevent housing prices from rising both in 2025 (10% on average) and in 2026 (7%).
• Improving profitability, especially among small and medium-sized construction companies, can help increase the housing supply. Accelerating land development timelines and reducing operating costs are key priorities.
• While the budget allocated to the new 2026–2030 Housing Plan is welcome, the lack of consensus will be an obstacle to achieving the overall goals pursued. Greater coordination between public administrations is necessary.

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