HOUSING PRICES IN SPAIN EXPECTED TO RISE MORE THAN 10% IN 2026

The Spanish housing market continues to experience strong upward pressure on prices, mainly driven by the imbalance between available supply and growing demand. According to the latest report from BBVA Research, this trend is expected to continue not only this year but also in the coming years. The shortage of available housing, the obstacles in developing new projects and the steady growth in residential demand are creating a scenario where access to housing is becoming increasingly challenging. Despite these difficulties, the real estate sector will remain one of the key drivers of the Spanish economy. Forecasts suggest a dynamic market, although important structural challenges will need to be addressed to balance supply and demand.

Sustained increase in housing prices
BBVA Research expects housing prices in Spain to increase by 10.2% this year, reinforcing the upward trend observed in recent years. This rise follows the historic increase recorded in 2025, when prices climbed 12.7%, the largest increase in the series recorded by Spain statistical institute. Forecasts also indicate that prices will continue to grow in the coming years, with an additional increase of around 6.8% expected in 2027. This situation reflects a highly pressured housing market where supply still struggles to meet current demand. As a result, access to housing will remain one of the main challenges for both buyers and investors.

Housing shortage drives new construction
One of the key reasons behind rising housing prices is the structural housing deficit that Spain has been facing for years. The existing housing supply is insufficient to meet current demand, pushing prices higher in many cities and coastal areas. However, this situation also creates opportunities for the construction and real estate development sectors. BBVA Research expects residential investment to continue increasing in the coming years, rising from 5.5% of GDP in 2025 to around 6% by 2027. This growth would be supported by strong demand and the urgent need to expand the housing stock. Public initiatives aimed at promoting affordable housing could also help stimulate the market if they complement private sector activity.

Challenges slowing sector expansion
Despite the expected increase in construction activity, the real estate sector still faces several challenges that limit a faster expansion of supply. Among the most relevant are the long timeframes required to develop land, the shortage of skilled labor and the rising costs of construction materials. In addition, productivity growth in the sector remains slow, which further restricts the ability to respond quickly to increasing demand. Infrastructure limitations also play a role, such as insufficient electrical capacity in certain provinces, which can delay new residential developments. These structural barriers contribute to sustained pressure on housing prices and highlight the need for reforms that facilitate investment and streamline urban planning processes.

Economic impact of global tensions
The report also evaluates the potential economic impact of recent geopolitical tensions on Spain economy. BBVA Research estimates that the conflict in the Middle East could reduce Spain GDP growth by around 0.2 percentage points in 2026 while adding approximately 0.3 percentage points to average inflation. The main transmission channel would be higher energy prices, particularly oil and gas. Even so, Spain economic outlook remains relatively solid, with GDP expected to grow by 2.4% in both 2026 and 2027. Tourism could also benefit if international travel shifts toward destinations considered safer, such as Spain. At the same time, domestic demand, investment and job creation are expected to continue supporting economic growth.

BBVA Research forecasts confirm that the Spanish housing market will continue to face strong price pressure in the coming years. The housing shortage combined with structural barriers in construction and land development will continue to limit the capacity of supply to respond quickly. At the same time, housing investment is expected to keep rising and the sector will remain a key pillar of the Spanish economy. Improving access to housing will require measures that facilitate construction, reduce administrative bottlenecks and strengthen collaboration between the public and private sectors. Only through these efforts will it be possible to rebalance the market and respond effectively to growing residential demand across the country.