Price Trends and Housing Affordability
The potential formation of a new real estate bubble in Spain has once again come into the public spotlight. Over the past year, housing prices have increased by more than 10% compared to the same period last year. At the same time, as noted by participants of the XXII Meeting of the Valuation Observatory, the mortgage burden on buyers is already approaching the levels seen in the mid-2000s. Despite this, representatives of the professional community and economists do not see signs of a major market overheating comparable to the situation in 2008. However, experts emphasize that certain regions of the country are experiencing a noticeable rise in prices, especially in coastal areas and major cities, where demand from foreign buyers and interest in short-term rentals are adding extra pressure.
Rental Market Situation
Analysts note that rental prices in Spain continue to rise. In September, the average rate reached 14.5 euros per square meter, up 10.9% from the previous year. Historic highs have been recorded in some provincial capitals. Notably, Madrid, Barcelona, Sevilla, Alicante, and Palma have seen the most significant increases in rental rates. Specialists forecast further price growth in the coming months, although the pace may slightly slow down. The main reasons cited are limited supply, a shift in demand from buying to renting, and competition from the tourist segment. Moreover, pressure on the rental market is being felt not only in major cities but also in mid-sized cities, where access to mortgage lending remains difficult.
Factors influencing real estate prices
Among the key factors sustaining high housing prices, experts highlight the activity of investors, foreign buyers, and high-net-worth individuals, who often purchase properties without the use of credit. Although new construction is showing positive trends, the volume still does not meet demand levels. Only a quarter of specialists believe that current housing completion figures indicate a recovery in the construction sector. Others point to ongoing challenges: rising costs of construction materials, shortages of skilled labor, and stagnating cement consumption. Special attention is given to regions with a high proportion of foreign buyers, such as the Balearic and Canary Islands, Alicante, Malaga, and Madrid.
Possible solutions and outlook
Almost all participants in the discussion agree that stabilizing the situation requires expanding the supply of housing. Proposed measures include building new rental properties, bringing vacant apartments into the market, strengthening legal protections for landlords, and fostering partnerships between the government and the private sector. Some experts advocate for combined approaches, such as temporary regulations and restrictions on short-term rentals, but most do not support strict nationwide limits. Additionally, specialists emphasize the importance of long-term strategies focused on increasing available housing, developing infrastructure, and improving financing mechanisms. Most believe that support for social housing construction and simplifying administrative procedures should be key elements. The need to expand government programs for young buyers and to encourage small and medium-sized developers is also being discussed.
