All the data point to the same conclusion: the Spanish real estate market will continue to expand during 2025, just as it has done in the years immediately preceding it.
While Spain’s Mediterranean and Balearic Islands continue to be strong real estate investment territories, the country’s potential extends far beyond these regions. Prominent examples include the Costa del Sol (Andalusia), the Costa Blanca (Valencia) and the Costa Cálida (Murcia).
However, buyers have now expanded their criteria, and it is possible to find excellent locations in other regions, always with the focus on exclusivity, comfort, quality of life, elegance and privacy.
What is the current state of the market? We can provide you with detailed information and figures to answer this question.
- Spanish Property Market Forecast and Data 2025
- Price evolution of newly built housing in Spain
- Stability of the Real Estate Confidence Index (ICI): impact on the high quality property market
- The near future: energy efficiency and sustainability in new buildings
- Summary: developments and trends in the Spanish real estate market
Spanish Property Market Forecast and Data 2025
Two key factors drive the attractiveness of the Spanish real estate market. Firstly, the strength of demand has remained solid despite economic fluctuations. Secondly, the scarcity of supply continues to offer real opportunities to meet the needs of buyers and investors.
A closer look at housing demand reveals noteworthy figures from January to August 2024: a total of 578,000 sales and purchases. This figure, provided by the INE (National Statistics Institute), is considered historically high when compared to the average number of operations formalised between 2015 and 2019 (450,000).
There has been a notable shift in demand for different types of housing: second-hand property transactions have decreased by 3.1%, while new-build housing has increased by 7.7%. According to the Association of Registrars, foreign buyers accounted for 14.7% of these transactions.
However, the sector is currently struggling to respond adequately to this strong demand for housing.On the contrary, the Spanish property market is characterised by a significant imbalance between the current housing supply and the strong demand previously mentioned.This imbalance is clearly illustrated by two data points extracted from Estadística Continua de Población (an INE study). While the number of net households created in Spain between 2021 and 2023 was 770,000, the number of new dwellings constructed was only 273,000.
Although during the end of 2024 these figures seem to be getting a little closer, the gap accumulated in previous years is so large that the problem is far from being solved.
Alejandro Pereira, Deputy Head of Investments at Quadratia
What are the key factors driving this misalignment?
The majority of experts concur on the diagnosis:
- Shortage of land.
- Lack of manpower.
- High construction costs (more on this later).
- A large number of regulatory changes.
In the meantime, demand is expected to remain robust through 2025, driven by factors such as job creation (400,000 new jobs), rising wages, improved financing conditions, migration flows and increased demand from foreign investors.
Price evolution of newly built housing in Spain
During 2023, the average price of new housing construction in Spain was 2,871 euros per square metre, representing an increase of 5.1% compared to 2022. According to the Sociedad de Tasación 2024 report, the price has reached 3,000 euros per square metre in 2024. While this may appear to be a substantial increase, it can be viewed as a stabilisation of prices, as in previous years the gap between new and old construction has been even more pronounced.
Consequently, growth is anticipated to remain moderate in comparison to previous years.However, it is crucial to acknowledge the potential impact of economic and governmental decisions on this outlook.
Construction cost in new construction projects
With regard to the cost of constructing new housing, in 2023 there was an 8.1% increase compared to the previous year, reaching €1,278 per square metre. This increase directly impacts the final prices of properties and also on the profitability of each real estate project.
Builders and developers like Quadratia are facing a great challenge, as all forecasts indicate that these costs will continue to rise in the near future.
The challenge now is to find innovative solutions to optimise processes and ultimately reduce operating costs.
José Miguel Gallego, Head of Quotations and Tenders at Quadratia
Stability of the Real Estate Confidence Index (ICI): impact on the high quality property market
The Real Estate Confidence Index is a quarterly index that is calculated by the Valuation Society. It is based on the opinions and analyses of 548 independent valuers who specialise in various economic and real estate aspects within their professional areas. The index covers data from the previous three months and includes a forecast for the next three months.
At the conclusion of the second quarter of 2024, the index stood at 52 points out of 100, indicating a two-point increase over the break-even point. This marks the first occasion since September 2022 where the index has reached this level, thereby confirming the resurgence of optimism in the real estate market.
Barriers for foreigners regarding luxury housing: Golden Visa elimination and more
The government has announced its decision to abolish the Golden Visa, the residence visa granted for investment that has been in operation in Spain since 2013. This decision follows concerns that the visa has a negative impact on the market, leading to increased property prices and gentrification, which is making it difficult for local residents to access housing.
In addition to this measure, another policy that could also act as a deterrent to the purchase of luxury homes by foreigners is the increase in the tax burden for the purchase of a property up to 100% of its value.
In light of this, many luxury real estate agents are encouraging their foreign clients to purchase properties promptly, as these and other measures are expected to come into effect from April. However, it is not yet certain that they will actually come into effect.
The near future: energy efficiency and sustainability in new buildings
Recent trends in the Spanish real estate market show an unstoppable interest in achieving energy efficiency and promoting sustainability. For instance, more than 70% of the homes that will be built in 2023 have an A label for CO2 emissions. These homes are characterised by:
- Limiting energy demand.
- Use renewable energy sources.
- Ensure that facilities are efficient.
- Provide an indoor air quality monitoring system.
This is indicative of the prevailing environmental awareness in the market, which is partly driven by the demands of the buyers themselves.
An efficient home guarantees economic savings, minimises environmental impact and improves comfort, bringing great added value to the home.
Tomás Belando, Architect Project Coordinator at Adoras Atelier
In line with the growing awareness of sustainability, Quadratia has made a strong commitment in this regard and has achieved the BREEAM® Urban Planning certificate for one of our most significant projects: the Allonbay Village residential development. This is the first time that this certification has been awarded in Spain, which distinguishes the most sustainable projects from an environmental, economic and social point of view.
For this purpose, a complex assessment is carried out, consisting of 8 categories:
- Community.
- Climate and energy.
- Ecology.
- Site design.
- Transport.
- Economy.
- Resources.
- Buildings.
Summary: developments and trends in the Spanish real estate market
- The Spanish real estate market is currently experiencing significant imbalances between supply and demand, which is naturally having an effect on property prices.
- In spite of this, there is a certain stabilisation in the increase in the average price of housing in Spain year after year. They continue to grow, but at a slower rate than in previous years.
- Although there are several factors that can act as barriers to foreign investment, there are many other incentives, such as the high returns that can be expected in certain locations or the different strategies currently available to influence the profitability of real estate investments.
