The Spanish housing market continues to defy affordability concerns, with the average price of second-hand homes climbing 16.2% in the year to July. According to the Fotocasa Property Index, existing properties now cost €3,154 per square metre, a level not seen in over a decade.
The data, released this week, shows that price growth is broad-based: all 17 autonomous communities reported annual increases. The sharpest rises were registered in Murcia, Cantabria, and the Valencia region, where demand from both domestic buyers and foreign investors remains robust.
Regional hotspots and market dynamics
Murcia led the surge with a 22.4% annual increase, followed closely by Cantabria at 21.8% and the Valencian Community at 20.1%. Even traditionally more moderate markets, such as Galicia and Asturias, posted double-digit gains, underscoring the nationwide character of the boom.
Analysts attribute the acceleration to a combination of factors: a resilient labour market, increased household savings during the pandemic, and a persistent shortage of new housing supply. The European Central Bank's recent interest rate cuts have also made mortgages more accessible, further fuelling demand.
"The market is showing no signs of cooling," said María Matos, director of studies at Fotocasa. "The lack of new construction, especially in urban centres and coastal areas, is pushing prices up faster than incomes can keep pace."
The price surge is particularly acute in tourist-heavy regions, where short-term rental platforms have reduced the stock of long-term housing. In cities like Málaga, Alicante, and Palma de Mallorca, locals are increasingly being priced out, prompting debates about housing policy and tourism management.
Spain's housing market has been a key driver of economic growth, but the rapid appreciation is raising concerns about affordability and the risk of a bubble. The Bank of Spain has repeatedly warned that household debt could become vulnerable if interest rates rise sharply or unemployment spikes.
For now, the market remains buoyant, with transaction volumes also up. In the first half of 2025, home sales increased by 8% compared to the same period last year, according to the National Statistics Institute.
The regional disparities are stark. While Madrid and Barcelona continue to see strong demand, their annual growth rates of 14.5% and 15.2% respectively are slightly below the national average, as high prices begin to deter some buyers. In contrast, cheaper regions like Extremadura and Castilla-La Mancha are catching up, albeit from a lower base.
Looking ahead, experts expect the market to moderate in the second half of the year, as the effects of higher prices and tighter lending standards begin to bite. However, with interest rates expected to remain low and demographic pressures persisting, the underlying demand for housing in Spain shows little sign of abating.
