Spanish Property Market Forecast for 2025: What Expats Need to Know

As the year 2024 comes to a close, the Spanish property market is poised for another year of significant activity and price increases, a trend that is expected to continue into 2025. Here’s a detailed look at what expats and potential buyers can anticipate in the coming year.

Continued High Demand and Rising Prices

Despite a slight decline in property sales in 2024, experts predict a rebound in 2025, driven by persistent high demand. According to forecasts from major Spanish banks such as Bankinter and Caixabank, property prices are expected to rise, albeit at a slightly slower pace than in previous years. Bankinter anticipates a 6% increase in property prices for 2024, followed by an additional 4% rise in 2025. Caixabank, on the other hand, forecasts a more modest 2.8% increase for 2024[1][4].

Supply Shortage and Its Impact

The chronic shortage of available properties in Spain continues to be a significant factor driving up prices. Solvia, a leading property firm, notes that the persistent lack of properties on the market, combined with constant demand, will sustain the upward trend in property prices. This shortage is particularly acute in highly sought-after urban areas and coastal regions, where demand from both domestic and foreign buyers remains strong[1][4].

Regional Variations

Different regions in Spain are experiencing varying levels of growth. Cities like Malaga and Valencia are showing strong growth, with Malaga seeing a 45% increase in price per square meter since 2020, and Valencia experiencing a 46% rise over the same period. These cities offer a balance between affordable living costs and a high quality of life, making them attractive investment opportunities[3].

In contrast, cities like Madrid and Barcelona, while still experiencing growth, offer more stable and secure investment options. Madrid’s price per square meter has reached €4,717, reflecting the stability of the capital’s real estate market. Barcelona, with an average price of €4,528 per square meter, continues to be a wise choice for buyers looking for a vibrant and cultural city[3].

Rental Market and Government Intervention

Rental prices in Spain have been skyrocketing, with a 12% annual increase in Barcelona alone by the end of 2023. The Spanish government's efforts to control rental prices through the new Housing Law have been met with mixed results, often creating more issues for tenants than resolving them. The law has led to an increase in seasonal rentals, further reducing the availability of affordable housing for families[5].

Economic and Interest Rate Factors

Economic and interest rate factors will continue to influence the property market in 2025. The Euribor rate, a key benchmark for mortgage rates in Spain, is expected to drop to around 2.65% by the end of 2024 and further decrease to approximately 2.1% in 2025. This could potentially boost demand, although the high interest rates of 2024 did not significantly impact the upward trend in property prices[4].

Conclusion

For expats considering entering the Spanish property market in 2025, it is crucial to be aware of the ongoing trends. High demand, coupled with a shortage of available properties, will likely continue to drive prices upward. While the rate of increase may slow slightly, the overall trajectory points to continued growth. As such, it may be wise to act sooner rather than later, especially in regions that are expected to see significant price increases in the coming year.