THE SPANISH PROPERTYÂ market has consistently attracted the attention of investors, homeowners, and economists alike. As we step into 2025, the landscape is set to undergo changes shaped by global economic factors, evolving buyer preferences, and policy developments.
Experts predict a continued rise in property prices across Spain in 2025, driven by a mix of factors such as limited housing supply, anticipated decreases in interest rates, moderate inflation, and population growth fueled by affluent international investors entering the market.
Here, we examine the expected trends in house prices, mortgage rates, and the broader real estate market dynamics that will define Spain’s property sector in the coming year.
Spanish house prices in 2025
The Spanish housing market experienced significant price growth in 2024, with resale property prices rising by 10.7% year-on-year to €2,244/m² in November. This marked the largest annual increase since 2006 and signified seven consecutive months of upward movement.
In 2025, house prices are expected to grow moderately, signalling a stabilisation phase after years of robust recovery. Predictions for national price increases vary slightly among key players:
- Bankinter forecasts a 5% rise, with stronger growth in major cities and popular coastal regions.
- Fotocasa anticipates increases of 5% to 8%.
- Idealista projects growth between 5% and 7%.
- Caixabank, taking a more cautious view, estimates a 4% nominal increase, citing affordability constraints as a limiting factor.
Urban hubs such as Madrid, Barcelona, Alicante, and Valencia are likely to see higher price hikes, supported by strong demand and limited supply, alongside sustained interest from international buyers.
Costa Blanca property prices
The coastal regions, particularly Alicante Province and the Balearic Islands, are expected to benefit from steady price increases due to high demand for holiday homes and tourism. However, rural areas farther from the coast may experience slower growth as urban migration trends persist.
In the Costa Blanca, areas like Orihuela Costa will remain hotspots for international buyers, especially those from Northern Europe. The region's mix of affordable traditional homes and super modern luxury developments appeal to a wide range of buyer profiles.
Mortgage trends in 2025
Mortgage rates will continue to play a crucial role for buyers in 2025. While rising interest rates in recent years have increased borrowing costs, the European Central Bank (ECB) is expected to take a cautious approach to further hikes, prioritising economic growth stability.
Declining interest rates and heightened competition among banks are predicted to improve financing conditions. Fixed-rate mortgages are likely to gain popularity as buyers seek security amidst economic uncertainty. Euribor rates are anticipated to drop further, stabilizing between 2% and 2.5%.
Key factors shaping the market :
- Demand: Spain's enduring appeal as a holiday destination and investment hub ensures continued demand from international buyers, particularly from the UK, Germany, and other northern European countries.
- Accessibility: Regions like Costa Blanca and Orihuela Costa offer excellent flight connections and short travel times, maintaining their status as top destinations for foreign investors.
- Government policies: Initiatives to increase affordable housing and stricter regulations on short-term rentals could influence market dynamics, with potential impacts on both demand and supply.
- Remote work: Hybrid and remote work trends will sustain demand for properties in coastal areas, where buyers can enjoy affordable prices compared to other Southern European destinations.
- Rental market: Rising rental costs and limited supply continue to challenge the domestic rental sector, while holiday rentals are expected to maintain strong demand, particularly in coastal hotspots like Costa Blanca.
- Construction challenges: High costs, limited land availability, and administrative hurdles are slowing new development, shifting demand to resale properties and contributing to price increases.
Orihuela Costa's local property market
Orihuela Costa's property market saw a positive performance in 2024, with a 6% year-on-year increase in property sales, driven by international buyers. British buyers led the market, accounting for 17.5% of sales, followed by German (15.5%), Irish (9.7%), Swedish (6.8%), Belgian (6.8%), and other nationalities.
In total, buyers from 18 different countries invested in the Orihuela Costa area in 2024, a trend expected to continue in 2025 as demand for coastal properties remains strong.
The property market outlook for 2025
The Spanish real estate market in 2025 offers a blend of opportunities. With steady price growth, rising demand for coastal properties, and evolving buyer preferences, the market is set to attract both domestic and international interest.
Prospective buyers and investors are advised to stay informed about these trends and consider seeking professional guidance to navigate the dynamic property landscape.
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Photo credit: Inmo Investments Real Estate S.L.
