Spain’s housing market is beginning to cool after reaching its highest transaction levels since the pre-crisis property boom.
But, according to experts at the country’s second-biggest bank, it’s not because buyers are disappearing.
BBVA Research says sales are easing mainly due to a severe shortage of housing supply and rapidly rising prices, which are increasingly pricing out potential buyers.
Official figures from Spain’s statistics office (INE) show that home sales fell 2.5% year-on-year in October, largely driven by a drop in new-build transactions. However, BBVA says demand remains strong and structurally supported.
This assessment forms part of the bank’s latest Situacion España report, which analyses trends in prices, transactions, construction and the wider economy looking ahead to 2026 and beyond.
Fewer homes available
BBVA Research expects housing transactions to remain broadly stable at around 725,000 sales per year in both 2025 and 2026. The slowdown, it argues, reflects limited stock rather than weakening demand.
Employment growth, household formation, immigration, rising wages and stable interest rates continue to underpin buyer appetite. The problem, the report says, is that there simply aren’t enough homes available, and prices are rising too fast as a result.
House prices are forecast to increase by more than 10% this year and by around 9% next year, a pace that BBVA warns will exclude a growing share of potential buyers from the market.
Construction picking up
The bank does expect a notable rebound in new housing construction. Building permits are forecast to rise by 10–12% this year and next, reaching between 140,000 and 155,000 homes – the highest level since 2008.
Residential investment is also expected to accelerate, growing by more than 6% over the next two years, supported by continued demand. Even so, BBVA cautions that this will still fall short of closing the gap between housing supply and demand.
At current levels, the shortfall between new homes built and household formation could exceed 700,000 units, broadly in line with estimates from the Bank of Spain.
To halve that deficit before the end of the decade, BBVA argues that housing investment would need to rise to around 10% of GDP, supported by a significant increase in public investment, particularly in affordable housing.
BBVA Research identifies housing as one of several structural bottlenecks that could weigh on Spain’s medium-term growth if left unresolved.
The report highlights a lack of political consensus on key issues, including housing construction, affordable electricity, labour market reform and immigration policy. It also warns that the repeated rollover of Spain’s national budgets is limiting the government’s ability to adapt spending to new social and economic pressures.
Without decisive action, the bank cautions that momentum alone will not be enough to sustain growth.
