Spain

Spain's Residential Property Market Analysis 2025

Lalaine C. Delmendo
Last update:
Next update: May 2026

Spain’s housing market continues to gain momentum, with accelerating price growth driven by robust property demand and renewed strength in residential construction. The country’s solid economic fundamentals have further supported this upward trend.

This extended overview from the Global Property Guide covers key aspects of Spain’s housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

Housing Market Snapshot

Nationwide house prices rose strongly by 15.35% (11.97% inflation-adjusted) in Q3 2025 from the same period last year, to reach an average of €2,517 per square meter (sqm), according to figures from the online property information site Idealista. This followed a full-year growth of 11.21% (8.14% inflation-adjusted) in 2024 and 8.16% (4.9% inflation-adjusted) in 2023.

Quarter-on-quarter, house prices were up by a modest 3.24% (3.57% inflation-adjusted) in Q3 2025.

Official figures released by the government also showed continued house price growth in the country. Data from the Banco de España indicated that Spanish house prices increased by 10.4% to an average of €2,093.5 per sqm in Q2 2025 from a year earlier. It was the highest y-o-y growth recorded since Q2 2006. When adjusted for inflation, house prices were up by 8.11%. Quarterly, nominal house prices rose by 2.96% in Q2 2025 (1.87% inflation-adjusted).

Spain's house price annual change:

Note: Spain's House Price Index: Residential Dwellings (€EUR/m2)
Data Source: Banco de España.

Similarly, the nationwide house price index published by Instituto Nacional de Estadística (INE) showed a strong growth of 12.72% (10.34% inflation-adjusted) year-on-year in Q2 2025, marking the sharpest annual increase since recordkeeping began in 2007. It was also the third consecutive quarter of double-digit price growth. Quarter-on-quarter, the index rose by 4.02% (2.92% inflation-adjusted) in Q2 2025.

By property type:

  • Existing dwellings: prices increased by 12.83% in Q2 2025 from a year earlier (10.45% inflation-adjusted), up from year-on-year growth of 12.26% in Q1 2025, 11.09% in Q4 2024, 7.87% in Q3 2024, and 7.27% in Q2 2024. It was also the biggest year-on-year price increase in recent history. On a quarterly basis, existing dwelling prices were up by 4.25% (3.14% inflation-adjusted) in Q2 2025.
  • New dwellings: prices rose strongly by 12.1% in Q2 2025 from a year earlier (9.74% inflation-adjusted), following year-on-year increases of 12.24% in Q1 2025, 12.26% in Q4 2024, 9.84% in Q3 2024, and 11.22% in Q2 2024. Quarter-on-quarter, prices were up modestly by 2.62% (1.54% inflation-adjusted) in Q2 2025.

All 19 autonomous regions in Spain recorded double-digit increases in house prices. Of which, Murcia saw the biggest year-on-year price growth in Q2 2025 at 14.57%, closely followed by La Rioja (13.74%), Aragón (13.7%), Andalucía (13.59%), Castilla y León (13.57%), Asturias (13.54%), Melilla (13.39%), and Madrid (13.26%).

Strong house price growth were also registered in Galicia (12.75%), Ceuta (12.67%), Valencian Community (12.58%), País Vasco (12.4%), Extremadura (12.16%), Navarra (12.04%), Balears (11.7%), Canarias (11.65%), Cataluña (11.59%), Castilla-La Mancha (11.3%), and Cantabria (10.82%).

Spain House Price Indices graph

Spain's housing market only returned to growth in 2015, having fallen by 36.3% (-42.9% inflation-adjusted) from Q3 2007 to Q1 2015, with existing home prices falling by as much as 43.1% (-49% inflation-adjusted), based on figures from INE. There were 24 consecutive quarters of y-o-y declines.

From 2015 to 2019, house prices increased by an annual average of 2.5% (1.6% inflation-adjusted). After a slight house price fall of 1.85% (-1.13% inflation-adjusted) in 2020 due to the adverse impact of the Covid-19 pandemic, the Spanish housing market bounced back quickly in the following years, with prices rising by 4.43% in 2021 and 3.25% in 2022. Yet in real terms, house prices are down, amidst soaring inflation.

Spain's housing market has strengthened in the past two years, with nationwide house prices increasing by a cumulative 12.74% (6.67% inflation-adjusted) in 2023-24.

SPAIN'S HOUSE PRICES, ANNUAL CHANGE (%)
Year Nominal Inflation-adjusted
2008 -3.21% -5.53%
2009 -6.25% -6.39%
2010 -3.53% -5.93%
2011 -6.78% -9.27%
2012 -10.02% -12.72%
2013 -4.20% -4.32%
2014 -0.26% 0.25%
2015 1.85% 2.17%
2016 1.47% 0.49%
2017 3.09% 1.62%
2018 3.86% 2.11%
2019 2.10% 1.65%
2020 -1.85% -1.13%
2021 4.43% -1.31%
2022 3.25% -3.13%
2023 5.32% 1.99%
2024 7.05% 4.58%
Sources: Global Property Guide, Banco de España, INE, Idealista

The recent strong growth in house prices was supported by increasing property demand. During 2024, home sales in Spain rose by 9.7% to 640,401 units as compared to a year earlier, according to the Instituto Nacional de Estadística (INE), following an annual decline of 10.2% in 2023 and increases of 14.8% in 2022 and 34.8% in 2021.

Demand continues to strengthen this year. In the first eight months of 2025, home sales in the country increased strongly by 16.1% year-on-year to 469,960 units.

Residential construction activity continues to increase. In 2024, the total number of housing starts rose strongly by 14.5% y-o-y to 112,220 units, an improvement from a meager growth of 1.1% in 2023 and a decline of 3.5% two years ago. Then in the first half of 2025, housing starts were up again by 6.2% to 60,816 units as compared to the same period last year.

Spain's broader economy remains fundamentally strong. During 2024, the economy grew by 3.2% from the previous year, primarily driven by robust consumption, which was sustained by a strong labour market, and by continued growth in services exports. It was significantly above the eurozone average of 0.9%.

Then in the third quarter of 2025, the Spanish economy grew by 2.8% year-on-year, following expansions of 3.1% in Q2 and 3.2% in Q1, according to INE. Quarter-on-quarter, the economy grew by 0.6% in Q3 2025, after expanding by 0.8% in Q2 and 0.6% in Q1.

With this, the IMF expects the Spanish economy to expand by a modest 2.9% this year, before gradually slowing to 2% in 2026. The European Commission, on the other hand, expects an economic growth for Spain of 2.6% this year and 2% next year.

For Banco de España, the domestic economy will likely grow by 2.6% this year and by another 1.8% in 2026.

Demand Highlights:

Property demand increasing again

During 2024, home sales in Spain rose by 9.7% to 640,401 units as compared to a year earlier, according to the INE, following an annual decline of 10.2% in 2023 and increases of 14.8% in 2022 and 34.8% in 2021.

Spain Residential Property Transactions graph

Demand continues to strengthen this year. In the first eight months of 2025, home sales in the country increased strongly by 16.1% year-on-year to 469,960 units.

By property type:

  • Existing dwellings: 366,773 units sold in the first eight months of 2025, up by 13.5% from a year earlier. This followed an annual growth of 6.7% during 2024
  • New dwellings: 103,187 units sold in Jan-Aug 2025, a strong growth of 26.1% from the same period last year. This followed an annual increase of 22.7% during the whole year of 2024, which was the highest new dwelling sales recorded since 2013.

Eighteen of Spain's 19 autonomous communities and provinces saw a year-on-year increase in demand in the first eight months of 2025. La Rioja recorded the biggest growth in home sales during the period, of 28.9%. It was followed by Ceuta with y-o-y sales increase of 27.8%, Castilla y León (27.2%), Castilla-La Mancha (23.4%), Melilla (22.3%), Extremadura (22%), Aragón (21.8%), Galicia (20.5%).

Strong sales growth was also registered in Murcia (19.9%), País Vasco (19%), Cataluña (18.9%), Andalucia (16.7%), Cantabria (16.4%), Asturias (16%), Madrid (12.3%), Balears (11%), and Valencian Community (10.5%). A modest sales increase of 3.4% was seen in Canarias over the same period.

Only Navarra recorded a slight year-over-year sales decline of 2.1% in the first eight months of this year.

Andalucía accounted for the biggest share in home sales during the first eight months of 2025 at 20%, followed by the Valencian Community with 16% share, Cataluña with 15.5% share, and Madrid with 11.5% share.

Land prices continue to climb amid a surge in land transactions

The average price of urban land transactions in Spain stood at €180.2 per sqm in Q2 2025, up by 4.3% from the previous quarter and by 8.1% from the same period last year, according to the Ministerio De Transportes, Movilidad y Agenda Urbana.

Ten of the 17 autonomous communities where figures are available saw land price increases in Q2 2025. Though land price movements vary considerably:

  • In Madrid, the average urban land price in the city rose strongly by 33% y-o-y to €358 per sqm in Q2 2025. Quarter-on-quarter, land prices were up by 16.9%.
  • In Andalucía, land prices were up by 14% y-o-y to an average of €187.9 per sqm. Yet, quarterly, land prices declined by 2.5% in Q2 2025.
  • In Cataluña, the country's second-largest region, land prices were up by 7.1% y-o-y to an average of €187.2 per sqm in Q2 2025. It was slightly higher by 1.4% as compared to the previous quarter.
  • In Castilla y León, the average land price was €80.7 per sqm in Q2 2025, down slightly by 1.1% from the previous year. However, quarter-on-quarter, land prices surged by 38.8%.
  • In Galicia, land prices stood at an average of €99.6 per sqm in Q2 2025, up by a modest 3.1% from the previous quarter but down by 11.2% from a year ago.
  • In Castilla-La Mancha, the average land price increased by 2.3% y-o-y to €102.7 per sqm in Q2 2025. Yet quarter-on-quarter, prices were down by 12.4%.
  • In the Canary Islands, the average land price increased strongly by 11% y-o-y to €270.6 per sqm in Q2 2025. Quarter-on-quarter, prices were up by a moderate 4.8%.
  • In the Valencian Community, the average land price was €215 per sqm in Q2 2025, up by 4% from the previous quarter and by 6.2% from the same period last year.

Spain Urban Land Prices graph

Demand for land in the country is now increasing strongly. In the first half of 2025, the number of land transactions surged by 28.7% y-o-y to 13,863 units, following annual declines of 6.8% in the whole year of 2024, 15% in 2023, and 11.7% in 2022.

Likewise, the value of land transactions rose sharply by 26.9% y-o-y to €2.06 billion in H1 2025, after declining by 1.7% in 2024 and 26.5% in 2023 and increasing by 3.7% in 2022.

Andalucía accounted for 19.7% of the total number of land transactions in H1 2025, followed by Cataluña (18% share), Castilla-La Mancha (14.7%), Valencian Community (10.4%), Castilla y León (9.8%), and Madrid (7%).

Spain Number of Land Transactions graph

Spain ends Golden Visa route for property investors, but foreign demand remains strong

Before the Covid-19 pandemic, foreign homebuyers accounted for about 12% to 20% of all home sales in Spain annually, sharply up from just a 4.24% share in 2009. In 2018, foreign homebuyers bought over 65,500 homes in Spain, up 7.4% from a year earlier, following annual growth of 13.7% in 2017. The Balearic Islands are especially attractive to foreigners, with about one-third of the total demand coming from foreigners, mainly due to their white-sand beaches and sunny Mediterranean landscape. It is followed by the Canary Islands, the Valencian Community, Murcia, and Andalusia.

The Golden Visa scheme, applicable since 30th September 2013, has increased interest not only from the Middle East but also from Asia and Russia. Any non-EU national bringing more than €500,000 to invest is automatically granted a Spanish residency permit.

In 2019, Spain approved 1,422 Golden Visas to main applicants, up by almost 20% from a year earlier. Of which, 681 Golden Visas were granted to foreigners via the real estate option - an increase of about 13.7% from the previous year and the highest figure ever recorded.

However, foreign homebuying slowed in the following year due to the Covid-19 pandemic. Golden Visas granted to foreigners were just 162 in H2 2020 and 232 in H1 2021 - two of the lowest ever seen since the program was launched. Interest from foreigners started to increase again in the second half of 2022, as the overall situation normalized. In H2 2021, Spain granted 833 Golden Visas to main applicants, up from 574 in H2 2019.

Since the launch of Spain's Golden Visa program in 2013, real estate has been the dominant investment route, with 96% of applicants opting for property purchases, particularly in major cities. As such, over 6,200 visas were issued via property acquisition. In total, around 15,300 primary applicants and nearly 35,000 of their family members have secured residency through the program, with investors from China, Russia, the U.S., and the U.K. accounting for the biggest shares.

In 2023 alone, foreign buyers purchased over 87,000 properties in Spain, representing around 15% of total real estate transactions in the country. Demand has surged, particularly among British and American investors, especially after Brexit.

Then in 2024, nearly 93,000 properties were purchased by foreign homebuyers in Spain, representing approximately 14.6% of total home purchases last year. Accordingly, it is a record level never before seen in the country.

Foreign buyers accounted for over one in four property transactions in the Balearic Islands (32.6%), the Valencian Community (28.9%), and the Canary Islands (27.2%), led by British, German, and Moroccan nationals as the top purchasers in 2024.

Foreigners have the right to buy and resell all kinds of property in Spain - residential, commercial, or land, with no limits.

However, because of the growing clamor to end the scheme in recent years, Spain formally eliminated the real estate investment option from its Golden Visa program on April 3, 2025. The government cited concerns that the scheme contributed to rising property prices in cities like Madrid and Barcelona, exacerbating housing affordability issues for local residents.

Existing visa holders and applicants who submitted before the cutoff date retain their rights, but no new applications are accepted under this route.

Despite this, foreign demand remains strong. In the first half of 2025, foreign buyers purchased 71,155 homes in Spain, up by 2% as compared to the same period last year.

The British remained the leading foreign buyers in Spain's property market during the first half of 2025, completing 5,731 transactions (8.1% of the total), followed by Moroccans with 5,654 sales (7.9% share) and Germans with 4,756 (6.7% share).

Supply Highlights:

Residential construction activity continues to grow

During 2024, the total number of housing starts rose strongly by 14.5% y-o-y to 112,220 units, an improvement from a meager growth of 1.1% in 2023 and a decline of 3.5% two years ago, based on figures from the Ministry of Development.

Residential construction activity continues to grow this year. In the first half of 2025, housing starts were up by 6.2% to 60,816 units compared to the same period last year.

By region, Ceuta registered the biggest year-on-year growth in housing starts in the first half of 2025, at a spectacular 266.7%, followed by La Rioja (124.9%), Melilla (73.9%), Galicia (43%), Cantabria (36.9%), Murcia (36.9%), Castilla-La Mancha (32.5%), Asturias (32.5%), Extremadura (25.9%), and Valencian Community (23.3%).

More moderate increases were seen in Andalucia (13.8%), Canarias (11.2%), País Vasco (8.2%), Aragón (5.2%), and Balears (3.8%).

In contrast, four regions saw falling housing starts in the first half of 2025, with Cataluña recording the worst decline of 23.9%, followed by Castilla y León (-21.5%), Navarra (-5.2%), and Madrid (-2.3%).

Andalucía accounted for the biggest share in housing starts in H1 2025 at 24.3%, followed by Madrid (16.2%), Valencian Community (11.5%), Cataluña (11.2%), Castilla y León (4.9%), and Castilla-La Mancha (4.9%).

On the other hand, housing completions increased by 7.6% to 86,609 units in 2024, following a minuscule growth of 0.7% in 2024 and a decline of 4.9% in 2022. However in H1 2025, completions fell by 5.1% to 39,878 units as compared to the same period last year.

Spain Housing Construction graph

Housing starts fell to an annual average of just 64,000 units in 2009-2021, from an annual average of 445,000 units in 1995-2008. Similarly, completions also dropped to an average of 64,000 units annually in 2011-2021, from 419,000 units in 1997-2010.

Latest figures showed that Spain's total housing stock totaled 27 million units in 2024, up slightly by 0.4% from a year earlier. Andalucia accounted for the biggest share of 17.6%, followed by Cataluña (14.7%), Valencian Community (12.3%), and Madrid (11.2%).

Spain Housing Stock graph

Rental Market:

Gross rental yields continue to fall

Gross rental yields on property in Spain stood at 5.43% in Q3 2025, slightly down from 5.6% in Q1 2025, 5.93% in Q3 2024, 6.17% in Q1 2024, and 6.09% in Q3 2023, according to research conducted by the Global Property Guide.

In the country's major cities:

  • In Madrid, apartments offer gross rental yields ranging from 1.97% to 6.95%, with a city average of 5.04% in Q3 2025.
  • In Barcelona, gross rental yields for apartments are relatively higher, ranging from 3.3% to 8%, with a city average of 7.17%.
  • Valencia offers rental yields ranging from 3.2% to 7.09%, with a city average of 6.11%.
  • In Córdoba, apartment rental yields are around 4.74% to 6.27%, with a city average of 5.61%.
  • In Alicante, gross rental yields for apartments range from 3.69% to 6.95%, with a city average of 5.59%.
  • Seville apartments offer rental returns ranging from 3.71% to 5.28%, with a city average of 4.96%.
  • In Palma de Mallorca, rental yields range from 4.15% to 5.03%, with a city average of 4.68%.
  • In Murcia, rental yields range from 3.45% to 7.2%, with a city average of 5.99%.
  • In Malaga, gross rental yields range from 3.51% to 5.71%, with a city average of 4.65%.
  • In Marbella, apartments offer rental yields ranging from 4.29% to 5.33%, with a city average of 4.87%.
  • In Tenerife, gross rental yields range from 4.5% to 5.6%, with a city average of 5.11%.

Soaring residential rents

During 2024, rental prices in Spain rose strongly by 11.5%, reaching an all-time high of an average of €13.5 per sqm, based on figures released by Idealista.

Spain's rent price index:

Note: Spain's Rent Price Index, % change 1 yr
Data Source: OECD.

Accordingly, the most expensive Spanish cities for renting a home, based on average rental prices, are the following:

  • Barcelona is the most expensive city in the country to rent a home, with an average rent of €23.4 per sqm in 2024, up by 13.9% from the previous year.
  • Madrid is the second most expensive city to rent, with an average rate of €20.7 per sqm by end-2024, up by a huge 15.3% from the preceding year.
  • In San Sebastian, rental prices rose by 7.2% y-o-y in 2024, to reach an average of €18 per sqm.
  • In Palma de Mallorca, the average rental price was up by 11.9% y-o-y to reach a record high of €17.2 per sqm.
  • In Málaga, the average cost to rent a home reached a record high of €15.1 per sqm last year, up by 11.4% from the prior year.
  • Bilbao's rental prices also increased significantly by 9.2% in 2024, to reach an average of €14.9 per sqm.
  • In Valencia, rental prices surged by 12.2% y-o-y to an average of €14.9 per sqm last year.
  • In Las Palmas on Gran Canaria, the average rental price for a home stood at €12.9 per sqm in 2024 - an increase of 10.9% from the preceding year.
  • In Girona, the average rental price increased by a modest 3.8% y-o-y to €12.2 per sqm.
  • In Seville, the average rent for a home stood at €12 per sqm by end-2024, up by 9.5% as compared to the prior year.

New rent control index introduced, replacing previous rent cap measures

Effective January 1, 2025, the Spanish government has introduced a new system for updating rental prices through the Housing Lease Reference Index (IRAV), developed by INE. This was mandated by Law 12/2023, the Right to Housing Act, which instructed the government to devise and implement a new curated index that will become the new benchmark for all rental contracts. This marks a significant shift from previous methods tied to inflation and follows recent government efforts to stabilize rental costs.

The IRAV replaces the use of the Consumer Price Index (CPI), which previously allowed rental increases in line with inflation. During the 2021-2022 inflation spike-when the CPI peaked at 10.8% in July 2022, many tenants saw sharp rent hikes. In response, the government introduced temporary rent caps: a 2% limit in 2022 and 2023, rising to 3% in 2024. These caps helped shield renters, who make up about 30% of the country's population, from soaring housing costs.

The new IRAV index is designed to provide more predictable and moderate rent adjustments. It is based on the lowest of three values: the annual variation of the CPI, the underlying inflation rate, and an adjusted average annual variation rate. Unlike the CPI, this composite approach aims to avoid extreme fluctuations and ensure greater stability in the rental market.

The IRAV applies to primary residence rental contracts signed after May 25, 2023, under Spain's Housing Law. Older contracts will continue to follow previously agreed terms. The index does not apply to temporary rentals, commercial spaces, rooms, or storage units.

The first published IRAV value, released in January 2025, was 2.20%, based on November 2024 data. The index gradually declined during the first half of the year, reaching 1.98% in March 2025 before edging back up slightly to 2.22% in September 2025, according to the latest INE data.

For tenants, this means annual rent increases are capped, for instance, a €1,000 rent could rise only €22 under a 2.2% IRAV. For landlords, it provides predictability but limits flexibility, especially in high-demand cities such as Madrid, Barcelona, and Valencia, where new rental listings remain expensive.

The IRAV also interacts with "stressed residential areas" (zonas tensionadas), where local authorities can impose stricter controls on rent levels.

Mortgage Market:

New mortgage loans increasing strongly

In the first eight months of 2025, the total amount of new home mortgages in Spain increased strongly by 39% to €51.48 billion as compared to the same period last year, according to INE figures. This followed an annual growth of 14.2% for the whole year of 2024 and a contraction of 19.7% in 2023. From around €126.6 billion annually in 2003-2010, new home mortgages declined to an average of just €41.7 billion per year from 2011 to 2024.

Similarly, the total number of new mortgage loans soared by 22.9% to 321,595 in Jan-Aug 2025 as compared to the prior year, after registering an annual increase of 11.2% for the whole year of 2024 and a decline of 17.9% in 2023. From an annual average of 1 million new home mortgages granted from 2003 to 2010, it declined to an average of 330,000 every year from 2011 to 2024.

By autonomous region, in the first eight months of 2025:

  • In Andalucia, the total value of new home mortgages surged by 35.5% y-o-y to €8.98 billion while the number of mortgages increased by 24% to 62,322.
  • In Aragón, the value and number of new home mortgages increased by 54% y-o-y to €1.13 billion and 39.6% to 8,806, respectively.
  • In Asturias, the value of new home mortgages was up by 29.1% y-o-y to €676 million while the number of mortgages increased 20.1% to 5,824.
  • In Balears, new home mortgages value soared by 39.1% y-o-y to €2.10 billion while the number of mortgages rose by 17.2% to 7,527.
  • In Canarias, the value of new home mortgages surged by 48% y-o-y to €1.56 billion while the number of mortgages rose by 21.3% to 11,683.
  • In Cantabria, loan value skyrocketed by 70.5% y-o-y to €616 million, and the number of mortgages surged by 50.9% to 4,533.
  • In Castilla-La Mancha, the value and number of new home mortgages surged by 44.6% y-o-y to €1.52 billion and by 28.3% to 13,589, respectively.
  • In Castilla y León, the value and number of new home mortgages increased by 51.6% to €1.65 billion and by 37% to 14,708, respectively.
  • In Cataluña, which accounts for about one-fifth of all new home mortgage loans in the country, the value and number of new mortgages rose by 37.6% y-o-y to €10.15 billion and by 23% to 56,285, respectively.
  • In Ceuta, the value and number of new home mortgages increased 11.4% y-o-y to €43 million and by 15% to 315, respectively.
  • In the Valencian Community, total mortgage loan value increased strongly by 44.5% y-o-y to €4.78 billion, and the number of loans rose by 28.4% to 38,557.
  • In Extremadura, the value and number of new home mortgages rose by 31.3% €527 million, and by 29.6% to 5,721, respectively.
  • In Galicia, the value and number of new home mortgages increased by 38.4% to €1.46 billion and by 32% to 12,210, respectively.
  • In Madrid, which accounts for nearly one-fourth of all new home mortgages in Spain, the total value of said loans surged by 35.5% y-o-y to €11.61 billion. The number of new mortgages was up modestly by 4.1% y-o-y to 46,498.
  • In Melilla, the value and number of new home mortgages rose by 25.9% to €49 million and by 23.5% to 336, respectively.
  • In Murcia, the value of new home mortgages rose by a huge 60.7% to €1.08 billion while the number of said loans increased 39.3% to 10,263.
  • In Navarra, new home mortgages value rose by 24% to €554 million while the number of loans increased slightly by 2.8% to 3,784.
  • In País Vasco, the value of new home mortgages surged by 35.5% y-o-y to €2.76 billion while the number of said loans was up by 28% to 16,447.
  • In La Rioja, the value and number of new home mortgages soared by 70.4% to €239 million and by 52.8% to 2,187, respectively.

Spain New Home Mortgages graph

Mortgage market expanding gradually again

As of September 2025, the total value of mortgage loans outstanding rose by a modest 3% to €510.79 billion as compared to a year earlier, an improvement from a year-on-year decline of 0.6% in September 2024.

Before this, total mortgages outstanding suffered an average decline of nearly 3% from 2012 to 2020. The mortgage market remained subdued in the succeeding years, registering year-on-year declines of 0.2% in 2022 and 3.2% in 2023, and a meager growth of 0.4% in 2024.

As a result, the size of the mortgage market as a percent of GDP has been declining in recent years, plunging to about 31.2% of GDP in 2024, down from 33.1% of GDP in 2023, 37.3% in 2022, 41.5% in 2021, and 44.9% in 2020, based on estimates from the Global Property Guide. This is far from the annual average of 60% of GDP from 2007 to 2014.

Spain Housing Loans Outstanding graph

Spanish interest rates continue to fall

Following the ECB repo rate, interest rates in Spain have generally increased sharply from the last quarter of 2022 to the second quarter of 2024. However, with the recent ECB policy shift amidst easing inflationary pressures, mortgage interest rates are now noticeably falling.

Spain's mortgage loan interest rates:

Note: Annualised agreed rate (AAR) / Narrowly defined effective rate (NDER)
Data Source: ECB.

In September 2025, the average interest rate for new housing loans in Spain was 2.66%, down from 3.26% in the previous year and 3.92% two years ago, according to the European Central Bank (ECB).

New housing loans by initial rate fixation (IRF):

  • Floating rate and up to 1-year IRF: 2.77% in September 2025, far lower than the 3.85% in the same period last year and 4.53% two years earlier.
  • 1-5 years IRF: 3.13% in September 2025, down from 3.87% in the previous year and from 4.67% two years ago.
  • 5-10 years IRF: 3.49% in September 2025, down from 4.03% a year earlier and from 4.06% two years ago.
  • Over 10 years IRF: 2.49% in September 2025, down from 2.87% in September 2024 and from 3.21% in September 2023.

Spain ECB Rate and Interest Rates for New Housing Loans graph

For outstanding housing loans, the average interest rate was 2.83% in September 2025, down from 3.55% in the previous year and from 3.50% two years ago.

Outstanding housing loans, by maturity:

  • Up to 1-year maturity: 3.14% in September 2025, lower than the 3.97% registered in September 2024 and from 4.05% seen in September 2023.
  • 1-5 years maturity: 5.84% in September 2025, down from 6.22% in the previous year and slightly lower than the 5.96% recorded two years ago.
  • Over 5 years maturity: 2.82% in September 2025, down from 3.54% a year earlier and from 3.49% two years ago.

Spain Interest Rates for Outstanding Housing Loans graph

Spain's housing market has traditionally been extremely vulnerable to interest rate changes, given that before 2004, more than 80% of new mortgages had an IRF of less than 1 year, a proportion which rose to 90% from 2005 to 2006.

However, there has been a decline in the share of adjustable-rate mortgages (ARMs) from 2007 to 2022, falling to a record-low of just 24.8% share in July 2022.

While the proportion of ARMs began to rise again throughout much of 2023 and the first half of 2024, it has generally trended downward in recent months, signaling renewed caution or shifting borrower preferences amid changing financial conditions. In August 2025, adjustable-rate mortgages represented approximately 40.6% of all new mortgage loans contracted, sharply up from 29.9% in the previous month and still slightly higher than the 38.7% recorded in the same month last year, according to INE figures.

Spain Mortgages Constituted According to Interest Rate graph

Foreclosures increasing sharply

In the first half of 2025, foreclosures in Spain increased strongly by 15.5% to 7,562 dwellings as compared to a year earlier, in stark contrast with a y-o-y decline of 11.9% in H1 2024, based on figures from INE.

By dwelling type:

  • Existing dwellings: 6,912 units in H1 2025, up by a huge 17% from 5,906 units in H1 2024. It is a sharp turnaround from the year-on-year decline of 13% seen in the same period last year.
  • New dwellings: 650 units in H1 2025, up slightly by 1.6% from 640 units in H1 2024. It is in contrast to the year-on-year decline of 0.5% in the previous year.

However, there are wide regional variations. Of the autonomous regions and cities, Ceuta registered the biggest year-on-year surge in the number of foreclosures in the first half of 2025 of 333.3%, followed by Extremadura (59.5%), Galicia (53.3%), Navarra (34.6%), Andalucía (32%), País Vasco (27.1%), Cataluña (22.2%), Castilla-La Mancha (17.4%), and Valencian Community (13%).

Moderate to minimal increases in foreclosures were recorded in Aragón (9.7%), Madrid (4%), Asturias (3.6%), and Murcia (1.2%). Foreclosures remained steady in Melilla over the same period.

In contrast, La Rioja experienced the biggest decline in foreclosures in H1 2025 from a year earlier, at 30%. It was followed by Canarias (-16.5%), Castilla y León (-13.6%), Cantabria (-13.6%), and Balears (-8.4%).

Andalucia, Cataluña, and the Valencian Community accounted for about 62% of all foreclosures in the first half of 2025.

Prior to this, foreclosures have been continuously declining in the past three years. During 2024, foreclosures fell by 3.3% y-o-y to 12,717 dwellings, following annual declines of 23.2% in 2023 and 17.2% in 2022.

Spain Foreclosures graph

Historic Perspective:

Spanish real house prices are still 31% below peak

From 1996 to 2007, Spain's national average house price rose by 197% (117% inflation-adjusted), one of Europe's highest house price increases. The price of coastal properties surged 250% (155% inflation-adjusted) from 1996 to 2007, as hundreds of thousands of foreigners, mainly from the UK, France, and Germany, bought the property.

In Madrid and Barcelona, house prices soared by 188% (109% inflation-adjusted) from 1996 to 2007, while prices in other inner provinces rose by 175% (101% inflation-adjusted).

Suddenly, in 2008, a housing slump battered the Spanish economy and brought spiraling unemployment. Developers were left with blocks of unsold properties and massive debts. Despite the price rises in recent years, nationwide house prices in 2024 were still about 6.2% (-31.3% inflation-adjusted) below peak levels.

Spain House Price Index graph

Socio-Economic Context:

Robust economic growth, strong labor market

On January 23, 2014, Spain was the second eurozone country to exit its international bailout program, after Ireland. The Spanish economy has consistently outperformed much of Europe since. However, it has been a long, hard slog. Recession had been Spain's normal condition for years, due to the global financial meltdown and the Eurozone debt crisis.

The Spanish economy grew by an annual average of 2.8% from 2015 to 2019. Then the Covid-19 pandemic broke out, causing consumer demand and business investment to plunge. The economy contracted by a huge 10.9% in 2020 - one of the hardest hits in the region and the country's worst performance in recent history.

Spain recorded a real GDP growth rate of 6.7% in 2021 and another 6.4% in 2022, enough to fully offset the pandemic-induced contraction in 2020. Spain's economic growth slowed sharply in 2023, registering a real GDP growth rate of just 2.5%, on the back of continuing geopolitical uncertainty, persistent high inflation, and rising interest rates.

During 2024, the economy grew by 3.2% from the previous year, primarily driven by robust consumption, which was sustained by a strong labour market, and by continued growth in services exports.

"The Spanish economy has continued to perform strongly, largely fueled by services exports and labor accumulation. Economic activity grew by 3.2 percent in 2024, underpinned by a continued expansion of services exports and a pickup in domestic demand," said the International Monetary Fund (IMF).

"Private consumption accelerated, supported by real income gains on the back of steady disinflation, solid nominal wage increases amid a tight labor market, and continued employment gains fueled by immigration. Investment, though, was more subdued, held back by multiple factors since the pandemic, including elevated domestic policy uncertainty," added the IMF.

In the third quarter of 2025, the Spanish economy grew by 2.8% year-on-year, following expansions of 3.1% in Q2 and 3.2% in Q1, according to INE. Over the same period:

  • Household spending rose by 3.3% year-on-year
  • Government consumption increased by 1.3% year-on-year
  • Gross fixed capital formation rose by 7.6% year-on-year
  • Exports of goods and services rose by 3.2% while imports were up by 6.1%

Quarter-on-quarter, the economy grew by 0.6% in Q3 2025, after expanding by 0.8% in Q2 and 0.6% in Q1.

With this, the IMF expects the Spanish economy to expand by a modest 2.9% this year, before gradually slowing to 2% in 2026. The European Commission, on the other hand, expects an economic growth for Spain of 2.6% this year and 2% next year.

"Real GDP growth is expected to remain robust in 2025, reaching 2.6%, and to soften in 2026 to 2.0%," said the European Commission. "Economic activity is set to be supported by domestic demand, owing to continued strong labour market performance upholding private consumption growth and the projected strengthening of investment, also thanks to the implementation of the recovery and resilience plan."

For Banco de España, the domestic economy will likely grow by 2.6% this year and by another 1.8% in 2026.

Spain GDP Growth and Inflation graph

In October 2025, the nationwide inflation rate was 3.1%, slightly up from 3% in the previous month but far lower than the 1.8% recorded in the same period last year, mainly driven by stronger increases in electricity prices, coupled with higher transport costs, particularly in the air and rail sectors.

The current inflation level in the country remains above the average of just 1.1% from 2010 to 2020 and the ECB's target of 2%. Inflation in Spain reached a nearly four-decade peak of 10.8% in July 2022, before easing to an annual average of 3.4% in 2023 and 2.9% in 2024.

The labor market remains stable. The nationwide unemployment rate stood at 10.45% in Q3 2025, slightly up from 10.29% in the previous quarter but down from 11.21% a year earlier, according to INE. This was the second lowest level registered since Q2 2008.

Over the same period, male unemployment was 8.97% while female unemployment was higher at 12.11%.

The total number of unemployed persons in Spain fell to 2,613,200 in Q3 2025, down by 140,900 people from a year earlier.

Spain Unemployment Rate graph

Unemployment in Spain averaged about 22% from 2010 to 2017 before falling to an annual average of 13.8% in 2018-24.

Improving public finances

Spain's budget deficit was equivalent to about 3.2% of GDP last year, according to the Bank of Spain, an improvement from shortfalls of around 3.5% of GDP in 2023, 4.6% in 2022, 6.7% in 2021, and 10.1% in 2020. However, it remains slightly above the pre-pandemic deficit of 3.1% of GDP recorded in 2019.

The deficit is projected to decline further to 2.5% of GDP this year and to an average of 2.3% in 2026-27.

"The government deficit forecast for 2025 is revised down by 0.3 pp, to 2.5% of GDP, as a consequence of favourable developments in government receipts that are partly linked to more robust growth in economic activity and come in spite of the fact that spending has risen slightly ahead of expectations," said Banco de España in its September 2025 Economic Bulletin.

"As a result, the government deficit in 2025 is set to stand below the Government's target of 2.8% of GDP. This improvement will carry over to 2026 and 2027, when the general government deficit is expected to stand at 2.3% of GDP," added the central bank.

The country's gross public debt declined to around 101.8% of GDP in 2024, down from 105.1% in 2023, 111.6% in 2022, 116.8% in 2021, and an all-time high of 120.3% in 2020 due to the introduction of pandemic-related stimulus packages.

The country's debt level is projected to decline slightly to approximately 100.7% of GDP this year.

Spain General Government Budget Balance graph

Sources:

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