House prices in Spain will keep on surging this year, the country’s second biggest bank has predicted.
According to the latest report from BBVA Research, property prices could rise by a further 10.2% in 2026, following a record-breaking jump of 12.7% in 2025.
The bank also forecasts a further 6.8% boost in 2027.
Shortage of homes driving prices up
Behind the continued price boom is a growing housing shortage across Spain.
Experts say there are simply not enough homes being built to meet current demand, creating a supply crunch that is pushing prices higher year after year.
Despite the negative impact on affordability, the report suggests the situation could also drive increased investment in the housing sector.
BBVA expects residential construction to play a bigger role in the Spanish economy, rising from 5.5% of GDP in 2025 to around 6% by 2027.
New-build boom on the horizon
The lack of available housing is also expected to trigger a rise in new developments, even though the sector continues to face serious challenges.
These include delays in land development, labour shortages, rising material costs and slow productivity growth, all of which continue to limit how quickly new homes can be delivered.
Even so, analysts believe the pressure on supply will force construction levels higher in the coming years.
Government plans under scrutiny
The report also highlights the government’s ‘España Crece’ fund, which aims to support the construction of 15,000 homes per year, alongside plans to boost affordable rental housing.
BBVA says the initiative could have a positive impact, but only if it complements private sector activity rather than replacing it, and helps address market failures that currently reduce profitability for developers.
Economic outlook: slower growth, rising prices
Beyond housing, BBVA warns of wider economic challenges ahead.
The bank says geopolitical tensions, particularly the conflict in Iran, could lead to slower economic growth and higher inflation in Spain.
While GDP is still expected to grow by around 2.4% in both 2026 and 2027, rising energy and transport costs linked to the conflict are likely to weigh on the economy.
Inflation is forecast to reach 2.9% in 2026 before easing back to 2% in 2027.
Energy prices are expected to be the main driver, with increases in oil and gas costs having a stronger impact on inflation than on overall economic growth.
Tourism could benefit
One potential upside is tourism. The report suggests geopolitical tensions in the Middle East could redirect travellers towards Spain, as tourists avoid conflict-affected regions and nearby destinations in the eastern Mediterranean.
At the same time, Spain’s labour market is expected to remain strong, with more than one million jobs potentially created across 2026 and 2027.
Ultimately, BBVA stresses the need for stronger investment conditions in Spain, especially in key sectors like housing.
The bank argues that solving the imbalance between supply and demand in the property market is critical, along with removing bottlenecks that are slowing down development.
