Spain’s chronic housing shortage is set to worsen dramatically over the next two years, with the country on course to be 885,000 homes short by 2027, according to a new forecast.
The lack of available properties will continue pushing prices sharply higher even as the number of homes being bought and sold falls, according to the latest analysis from BBVA Research.
The bank expects Spanish house prices to rise by another 12% in 2026, while property sales are forecast to drop by 7.3%.
Relatively low interest rates, rising employment and real wages, continued foreign demand and rapid household creation driven partly by immigration are all supporting the market.
But BBVA Research believes the shortage of properties available to buy will become such a constraint that sales will fall despite that strong underlying demand.
The bank has already downgraded its sales forecast after the property market performed more weakly than expected during the opening months of 2026.
Transactions are expected to recover slightly in 2027, increasing by 0.6% to just over 700,000 home sales.
Spain isn’t building enough homes
Construction is increasing but nowhere near quickly enough to keep pace with the number of new households being created.
BBVA Research expects permits for new homes to increase by 10.1% this year and another 12.6% in 2027.
Housing starts are forecast to rise from 139,000 in 2025 to 153,000 in 2026 and 170,000 in 2027.
Investment in residential construction is consequently expected to increase to 5.7% of Spanish GDP this year and 6% in 2027.
But those figures remain substantially below the number of new households being formed.
Spain is expected to add approximately 223,000 households in 2026 and another 217,000 in 2027.
That means this year alone, the number of new households would exceed housing starts by around 70,000.
The imbalance will add to a shortage that BBVA Research estimates already stood at around 700,000 homes in 2025.
By 2027, that accumulated deficit is expected to reach approximately 885,000 properties.
The problem will be particularly acute in areas experiencing the strongest population and housing demand.
Prices to rise 12% this year
That enormous gap between supply and demand is expected to keep driving up property values.
BBVA Research forecasts a 12% increase in house prices during 2026, followed by another 5.7% rise in 2027.
It means affordability is likely to remain one of the biggest problems facing would-be buyers even if the number of transactions falls.
There are also risks that construction could become more expensive.
The report warns that international trade tensions could increase the cost of building materials, potentially delaying projects or making some developments financially unviable.
Government housing plan ‘not enough’
BBVA Research welcomed elements of Spain’s State Housing Plan, including increased funding, attempts to create a permanent stock of public housing and measures designed to encourage industrialised construction and the development of land.
But it warned that the measures will not be enough to eliminate Spain’s accumulated housing deficit.
The resources available remain relatively small compared with the scale of the shortage, while many of the longstanding obstacles preventing Spain from rapidly increasing construction remain unresolved.
These include a shortage of development-ready land, insufficient construction workers, regulatory uncertainty and lengthy and complicated planning procedures.
The success of the government’s strategy will also depend heavily on cooperation between different layers of government and its ability to attract private investment.
