REAL ESTATE BOOM CONTINUES DESPITE RISING PRICES

The Spanish housing market is experiencing a strong surge in activity. In May 2025, over 61,000 property transactions were recorded, figures not seen since the peak of the 2007 housing bubble. This 40% year-on-year increase reflects sustained demand, driven by factors such as improved mortgage conditions, a lack of rental alternatives, and a financial environment that remains attractive to buyers with sufficient savings, despite the continued rise in property prices.

New homes gain traction despite their higher cost
One of the most notable trends is the 42% year-on-year growth in new home sales. Although new properties are more expensive on average, many buyers are opting for them due to the limited availability of renovated housing and the narrowing price gap with second-hand homes. This shows that, for those who can afford it, the appeal of a brand-new property remains strong. Still, second-hand homes continue to dominate the market, accounting for nearly 80% of all sales.

Renting becomes a less viable option
The rental crisis in major cities such as Barcelona and Madrid has led many people to consider buying as their only option. Skyrocketing rents and a lack of available rental properties have pushed many toward homeownership, even when that wasn't their initial plan. In many cases, mortgage payments are now lower than rent, provided buyers have enough savings for the down payment and taxes. This has shifted the mentality of a large segment of the population.

Mortgage conditions and rising inequality
Falling interest rates have improved access to financing, making it easier to take out a mortgage. However, the market is becoming increasingly polarized: only those with substantial savings can benefit from these favorable terms. Meanwhile, young people and low-income workers remain excluded from both renting and buying. This growing divide reflects a deeper structural problem that goes beyond short-term market dynamics.

Spain’s housing market seems poised to continue growing, with prices now just 4% below their 2007 peak. Demand remains strong, and although construction activity is picking up, it still falls short of the needs in densely populated areas. If current trends continue, 2025 could close with record-breaking sales, but challenges around accessibility and housing equity are far from resolved.