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Local Spain
15-07-2025
- Business
- Local Spain
Should I buy a property in Spain now before it gets too expensive?
The number of people buying homes in Spain currently is skyrocketing. In fact, the country's just had the best month of May since 2007 in terms of property purchases, with 40 percent percent more homes sold than for the same month last year. Not exactly news one would expect given Spain's widely reported housing crisis. So what does this mean for foreigners - whether resident or non-resident - who have been considering buying a property in Spain? Should you rush or should you wait? Of course, committing to buying a property depends on your individual circumstances and your finances, but the general advice from market analysts is that if you want to buy a home, you should do it sooner rather than later. In a nutshell, banks' mortgage conditions are currently good and the data points to continuous house property price and rent increases throughout 2025 and beyond. Take the price evolution graph of Spain's main property search engine Idealista, which shows that the average price per square metre in June 2025 was €2,438. So a 100sqm flat in Spain costs €243,000 on average. A month earlier, in May 2025, it was 2 percent cheaper, meaning that a home is around €4,860 more expensive now. A year ago in June 2024, it was 14 percent cheaper, an incredible €34,000 less than it is now. In this context, it's no surprise that many people in Spain wants to get in there quick before prices increase too much. The latest data shows that Spain recorded the third-highest rise in housing prices in the entire Eurozone in the first quarter of 2025, with an increase of 12.3 percent, only surpassed by Portugal (+16.3 percent) and Croatia (+13.1 percent). Rents are climbing at a similar rate, higher still in the popular spots and main cities, meaning that people who are on the fence about buying a Spanish property are considering more than ever whether to take the leap and buy a home. In this context, it's no surprise that fear is driving many Spaniards to buy. Just as inflation influences what and how much consumers buy at the supermarket, expectations for the housing market spur people to purchase property because they anticipate it will only get worse. But there are other factors at play too. "There are several factors that explain the current strength of housing demand, including growth in gross disposable income, strong foreign demand, positive migration flows, the favourable financial situation of households, and lower interest rates," Judit Montoriol, chief economist at CaixaBank Research, told Business Insider. Why Spain's current mortgage conditions mean now is a good time to buy Firstly, the situation has changed in recent months thanks to a decline in the Euribor, which is returning to levels not seen since autumn of 2022. This means much better mortgage interest rates are available and better conditions too. Spanish banks now offer a TIN (Nominal Interest Rate) under 2.5 percent and financing up to 90 percent. With the Euribor hovering around 2 percent, the mortgage market is seen as much more attractive now and promises to become even more so in the coming months. Euribor is the interest rate most often used to work out mortgage payments in Spain and to calculate both variable and fixed rates. Why future property price rises should spur people to buy now in Spain Experts believe that house prices will continue to grow at a steady rate throughout 2025. Caixabank forecasts the rise will be 7.2 percent, Bankinter believes it will be 5 percent, American credit rating agency S&P puts it at 4.7 percent. One way or another, the average property in Spain is likely to cost between €10,000 and €20,000 extra (if not more) in 2026 than in 2025. This is mainly due to the increase in demand for housing, limited supply and an insufficient amount of new construction, which will keep prices high. And although there are signs of a property bubble developing in some Spanish cities, there isn't the same set of circumstances which precipitated prices to come crashing down as in the case of the 2008 financial crisis. Conclusion The general advice from market analysts that any savings you'll make from a better mortgage rate could be outweighed by increases in property prices. This means waiting could cost you more if you're planning on holding out for better mortgages. As rental prices are also continuing to rise, it might be worth spending the money on going towards a mortgage instead of increased rents anyways. As with everything though, it's important though to think about your situation and what is best for you. It will also make a difference depending on where in the country you want to buy. If you're buying in a big popular city, where prices have increased the most, you may want to act sooner, but if you're buying in rural countryside it may not matter so much as prices may not rise as fast.
Local Spain
11-04-2025
- Business
- Local Spain
Why Spain's property prices are rising much faster than in the rest of Europe
New data has shown that property prices in Spain are rising faster than almost anywhere else in Europe. Spain was the second country in terms of price rises across the Eurozone in 2024 - 11.4 percent - behind only the 11.6 percent rise recorded in neighbouring Portugal. For context, in Italy the annual rise was 4.5 percent, in Germany 1.9 percent and in France prices decreased by -1.9 percent. The Eurozone average was 4.2 percent, while in the EU more widely prices grew by 4.9 percent. Even on a quarterly basis, Spain stands out. The increase in Spain during the fourth quarter of 2024 was 1.8 percent compared to the previous three months, when it had been 2.8. However, this still represents a tripling of the quarterly rate for the Eurozone and more than double the EU as a whole, where the increases were just 0.6 percent and 0.8 percent, respectively, according to Eurostat data. Experts point to a number of factors, including Spain's strong economic performance pushing up prices and the underlying structural combination of high demand and low supply in the property market. Domestic economic performance can influence property markets, according to property experts. 'Since the pandemic, the behaviour of housing has been very different from country to country,' José García Montalvo, professor at the Pompeu Fabra University, told El País. 'The dynamics of the economic cycle have a strong influence on the dynamics of housing prices,' he adds. Judit Montoriol, chief economist at Caixabank Research, shares this view: 'In the last year, Spain is one of the places where house prices have risen the most, but it is also a year in which it has stood out very positively as the best performing European economy.' This partly explains why prices in Spain have continued rising in recent years, and are now almost 20 percent more expensive than at the start of 2022 when Russia invaded Ukraine. The inflationary crisis that came from that was experienced across Europe, and yet Spain still stands out for its price rises. Analysis from Bank Inter shows that there are several other contributing factors. Growth in demand for housing, spurred by population growth mainly driven by foreigners, plays a large part. A Bank of Spain report points out that the demand for housing has been driven, to a large extent, by population growth and the arrival of non-residents. It highlights that foreigners now represent more than 20 percent of housing purchases in Spain, reaching a volume of 130,000 units per year. Often they are wealthier foreigners who inflate the market. The average price per m/2 of housing purchased by non-resident foreigners in 2023 was 70 percent higher than that of resident nationals. The other side of the equation is the lack of supply. According to INE data, the construction of new housing remains low in Spain at around 90,000 homes per year. Yet calculations from the Banco de España estimate that Spain will have a shortfall of 600,000 homes by 2025. Experts also point to rapidly rising rents also inflating the property market and putting up prices. In many cities, average rental prices are up by as much as 10 percent year-on-year. Staggeringly, the price rise on room rentals is 90 percent when compared to figures from 2015, according to new data published by property portal Idealista. In many of Spain's provincial capitals, average rents are north of €1,000 per month. Monetary policies at the European level could've also contributed to price increases in Spain because the European Central Bank's interest rate cuts in recent months are another factor driving housing demand. According to the forecasts of Bankinter's Analysis team, the ECB's cuts and the forecast of further reductions will cause the Euribor, the rate tied to most mortgages in Spain, to continue to moderate, easing credit, making buying more attractive and bringing more buyers into the market.
