Spain: Market Dynamics Outlook
Analysts at Bank of America have revised their forecasts for the real estate market in Spain. According to their estimates, housing price growth will start to slow down by 2026. The main reason is limited affordability after a prolonged period of rising prices. Experts believe that, in the coming months, prices will continue to rise, supported by lower interest rates. However, as property values climb higher, purchasing power decreases, which is likely to reduce demand and, as a result, lead to slower price growth in the future.
Factors Influencing Supply and Demand
In 2024, Spain’s economy is growing at a rate of 3.2%. Unemployment has reached its lowest level since 2008, standing at 10.6%. Average salaries have risen by nearly 4%. Migration flows and the activity of foreign buyers, who purchase around 15% of all properties, are providing additional momentum to demand. Nevertheless, the volume of new construction remains low—around 87,000 homes are built annually. This is far below pre-global financial crisis figures. The main causes are a shortage of labor, limited available land, and rising construction costs.
Housing Shortages and Government Response
According to estimates by the Bank of Spain, the country faces a shortage of around 700,000 housing units. Bank of America notes that the current pace of construction is insufficient to reduce this deficit; on the contrary, it may even increase. The issue of housing supply is becoming increasingly urgent, as emphasized by representatives of the Bank of Spain. However, so far the government has not introduced any concrete measures or programs to address the situation.
