Spain’s red-hot property market is finally cooling after a record-breaking year, but buyers hoping for bargains may be disappointed.
After more than 714,000 home sales in 2025, the highest figure since 2007, experts now warn the frenzy is losing steam.
According to CaixaBank Research economist Pedro Alvarez, demand has ‘reached its ceiling’ and is expected to stabilise rather than keep climbing.
Sales this year could fall to around 700,000 – or even lower – still historically strong, but no longer at peak levels.
The slowdown is being seen across the board, affecting both Spanish and foreign buyers, residents and non-residents alike.
However, while activity may cool, prices are not expected to follow suit.
A chronic housing shortage is continuing to push values upwards. CaixaBank estimates Spain already faces a supply gap of around 700,000 homes, echoing figures from the Bank of Spain.
As a result, prices could rise by more than 6.3% this year, potentially even higher.
‘We’re in a market where demand is very clear – and supply just isn’t responding,’ Alvarez said, pointing to intense pressure in hotspots such as the Mediterranean coast, Madrid and the islands.
Developers, meanwhile, are grappling with labour shortages, soaring construction costs, regulatory hurdles and delays to the new Land Law, all of which are worsening the supply crunch.
Is this another housing bubble?
Despite double-digit annual price rises in 74% of Spanish towns with more than 25,000 residents, CaixaBank insists this is not a repeat of the 2008 crash.
In real terms, average prices remain about 15% below the previous peak, banks are lending more cautiously, and mortgage conditions remain relatively stable. Affordability has worsened, but is still below pre-crisis levels.
Strong economy means steady interest rates
On the wider economy, CaixaBank now expects Spain’s GDP to grow by 2.4%-2.5% this year, stronger than previously forecast. While global geopolitical tensions and public debt remain concerns, domestic growth and employment are holding firm.
The European Central Bank is expected to keep interest rates steady at around 2%, with no significant hikes anticipated before 2027.
The buying frenzy may be easing, but with demand still high and supply tight, Spain’s property prices look set to keep climbing.
