Spain’s property market continues its robust expansion, with housing transactions expected to rise between 3% and 4% in 2025, according to the latest figures from leading property servicer Solvia.

The company’s Q4 2024 Solvia Market View report reveals that residential property transactions reached 172,551 in the final quarter of 2024 — the highest figure since mid-2022. That’s a 3.6% increase quarter-on-quarter and a remarkable 32.9% jump compared to the same period last year. These figures point toward a housing market fuelled by solid buyer appetite, favourable financing conditions, and renewed interest from international investors.

Demand surges, but supply struggles to keep up

According to Solvia, several forces are powering this upswing: falling interest rates, stable job creation, and growing international demand. However, supply continues to lag behind demand, particularly in the new-build sector. Although the volume of newly constructed homes is gradually recovering, it remains insufficient to meet the needs of the market — a mismatch that continues to drive prices higher and makes affordability a growing issue.

“We’re seeing more transactions because of pent-up demand, falling interest rates, and demographic changes like smaller households,” said Juan Ramón Prieto, Solvia’s Chief Operations Officer. “2024 closed with a transaction volume comparable to 2007–2008, but with three million more people in the country — all of whom need a home.”

New-build shines, but second-hand still dominates

In 2024, total housing transactions stood at 636,909, marking a 9.2% annual increase. Of those, new-build sales rose by 21.6% year-on-year to reach 131,764 transactions, while the second-hand market grew by a more modest but still notable 6.4%, with 505,145 transactions completed.

In Q4 alone, new-build homes accounted for 22.4% of all transactions (38,671 units), rising sharply by 18.3% over the previous quarter and by 61.1% year-on-year. Meanwhile, second-hand sales made up 77.6% of the total, growing by 26.4% year-on-year but stabilising on a quarterly basis.

Not all provinces followed the trend

Despite buoyant national figures, 15 provinces recorded quarterly declines in the number of sales. The steepest drops were in Tenerife (down 12%), Álava (–10.9%), and Huesca (–7.8%). On the other end of the scale, Cuenca, Ourense, and Soria all registered sales increases of over 30%, with 10 more provinces seeing double-digit growth.

On an annual basis, all provinces saw gains in sales activity. La Rioja led the pack with an astonishing 70.6% annual increase, followed by León (68.3%) and Pontevedra (56.3%). Girona, Navarra, and Almería posted the most modest growth, with increases between 13.4% and 14.5%.

Mortgages up as buyers regain access to credit

Alongside the rise in transactions, mortgage lending also saw a significant revival. 123,897 mortgage loans were signed in the final quarter of 2024 — up 13.4% on the previous quarter and 37.8% year-on-year. For the entire year, mortgage approvals totalled 435,328, a solid 8% rise compared to 2023.

If borrowing conditions remain favourable, 2025 is expected to see easier access to credit, which could further catalyse the housing market.

Home prices continue upward march

The national average home price reached €2,164/m² in Q4 2024, up 2.4% from the previous quarter and 9.1% year-on-year. Second-hand properties averaged €2,113/m², rising 8.7% annually, though quarterly growth was milder at 1.6%. New-builds fetched €2,338/m², up 3.7% on the quarter and 8.3% year-on-year.

This steady upward trajectory is expected to continue into 2025, with Solvia forecasting residential property prices to rise between 4% and 5% by year-end.

Madrid reclaimed its spot as the most expensive province, at €3,780/m², nudging ahead of the Balearic Islands (€3,771/m²). At the other end, Badajoz, Jaén, and Ciudad Real offered the lowest housing costs, with prices below €800/m².

Price growth strongest in Cuenca — again

Among provinces, Cuenca posted the steepest annual price increase at 62%, while Ourense, Salamanca, and Castellón also saw significant gains. Trimestrally, Cuenca led once more with a 28.3% jump. Conversely, León, Málaga, and Las Palmas experienced the largest quarterly price drops — between 4.6% and 6.3%.

Madrid and Barcelona: soaring values

In Madrid, average prices rose 3.5% quarter-on-quarter to €4,030/m², an acceleration from the previous quarter’s 1.6% rise. Year-on-year, prices grew 7.1%, with all districts recording increases — most notably Arganzuela, Vicálvaro, Centro, and Moncloa-Aravaca.

Barcelona followed suit with a quarterly increase of 2.3% to €3,937/m², and annual growth of 5.7%. Districts like Ciutat Vella, L’Eixample, and Sant Martí led price rises, with quarterly gains between 2.3% and 2.9%.

Rents rise above 10% annually, supply remains tight

Rental prices also soared in the final quarter of the year, averaging €13.6/m² per month, up 2.3% quarter-on-quarter, outpacing the previously recorded 1.5% rise. Over 2024, rents increased 10.6% nationally, highlighting the ongoing imbalance between high demand and constrained supply.

Barcelona claimed the title of most expensive rental market at €19.5/m², followed by Madrid (€18.2/m²) and the Balearic Islands (€17.3/m²). On the more affordable end, Zamora, Lugo, and Jaén offered rents below €7/m².

Quarterly rental growth peaked in Segovia, Lleida, and Valladolid, all logging increases above 6%. Soria, Cáceres, and Jaén reported the sharpest declines. Jaén was also the only province with an annual decrease, while Cuenca (22.4%), Guadalajara (16.4%), and Ávila (15.6%) posted the strongest year-on-year gains.

Conclusion: Momentum set to continue into 2025

With transaction volumes, prices, and mortgage figures all climbing, Spain’s housing market appears to be closing in on a new cycle of expansion. But with demand still significantly outstripping supply — particularly in hotspots — accessibility remains a key obstacle going forward.

Solvia calls for greater collaboration between the public and private sectors to unlock land, accelerate the delivery of new homes, and safeguard affordability. Whether the industry and policymakers will rise to the challenge remains to be seen.

Spain’s housing market is showing no signs of cooling down, with Fitch Ratings predicting property prices will climb between 6% and 8% this year. The sharp uptick comes despite ongoing concerns over sluggish investment and a persistent mismatch between housing supply and demand.

Supply struggling to keep up

In its latest Iberian Mortgage Market Performance Monitor (April 2025), Fitch warns that both public and private investment in new residential developments remains inadequate to ease Spain’s growing housing crisis. The demand for homes continues to outpace supply, placing upward pressure on prices despite government efforts to expand housing availability.

The rating agency argues that building a robust supply of social housing and streamlining the construction process will be critical to rebalancing the market. But current policy measures, it says, are unlikely to move the needle.

Limited policy impact

Spain introduced 12 measures earlier this year aimed at boosting housing supply, including tax breaks and guarantees for landlords. Meanwhile, Portugal unveiled tax reductions and deed fee exemptions to support homeownership. However, Fitch believes these initiatives will have only a “limited impact” on actually increasing the number of available homes.

“Only around 10% of completed housing in Spain between 2020 and 2024 was designated as affordable or subsidised housing,” the report states—significantly down from 40% in 2012. The volume of social housing across Spain and Portugal is now just 2% to 3% of their total housing stock, considerably below the eurozone average of 10%.

What’s fuelling the price surge?

A mix of positive macroeconomic signals is supporting the housing market: robust job markets in both Spain and Portugal, expectations of interest rate cuts, and an influx of non-resident buyers—many of whom are willing to pay well above local market rates—all contribute to pricing momentum.

Fitch has also upgraded Portugal’s projected house price growth to between 8% and 10% for 2025, following gains of 6% to 8% last year. Spain’s previous forecast was a more modest 4% to 6%, highlighting the upward revision based on current trends.

Accessibility stretched to breaking point

Worryingly, the report forecasts that housing affordability will deteriorate further, especially in capital cities. In Madrid and Lisbon, the ratio of house prices to household income is expected to reach eight times the average salary—well above the national average multiplier of six.

Mortgage activity remains strong

Despite higher prices, mortgage lending is expected to keep growing. The number of new mortgages increased by 19% in Spain and 34% in Portugal in 2024, spurred on by improved macroeconomic conditions and the lingering appeal of long-term fixed rates.

In Spain, more than half of new mortgages in 2024 were fixed-rate loans — a trend that’s likely to continue under a looser European Central Bank (ECB) interest rate policy. Portugal, on the other hand, still leans heavily toward variable-rate loans, reflecting their current financial attractiveness to borrowers.

Outlook for 2025

The long-standing issue of housing undersupply remains firmly on the table for 2025. While price growth may benefit owners and investors in the short term, squeezed affordability and limited access to housing pose policy and social challenges that no government can afford to ignore.

Unless investment scales up significantly—especially in social and affordable housing—the chorus of warnings from experts like Fitch is likely to grow louder, not quieter.