The Spanish real estate market is set for growth in 2024-2025, supported by strong demand, favourable financial conditions, and economic improvements, yet hindered by persistent supply shortages and affordability concerns.

The Spanish real estate market is experiencing a significant upswing, fuelled by strong demand, limited supply, and economic improvements. Following a decline in housing transactions in 2023 due to rising interest rates, the market stabilised in 2024 with notable growth in the sale of new homes. Factors such as wage increases outpacing inflation, enhanced employment opportunities, robust foreign interest, and easing of financial conditions have bolstered demand. Despite these trends, a housing supply deficit persists, largely stemming from barriers like limited developable land, regulatory challenges, and heightened construction costs, which remain elevated compared to pre-2019 levels.

Home prices, particularly for new builds, have soared, with 2024 witnessing significant year-on-year growth. Expectations for 2025 suggest continued price rises, driven by both supply-demand imbalances and a favourable macroeconomic environment. However, affordability challenges may emerge as a constraint for future market expansion, potentially influencing societal and economic trends, such as mobility, hiring, and demographic decisions. Addressing these issues critically requires scaling affordable housing development. While the real estate market outlook remains optimistic, it also faces risks tied to sustainability and socioeconomic consequences, necessitating nuanced strategies to bridge supply gaps and ensure long-term market stability.