Home sales and price growth 'slowdown' due, says Bankinter

RESIDENTIAL property sales will slow down 'by 5%' in the second half of 2025, leading to moderation in price growth, according to the latest report from Bankinter.

The high-street entity predicts the housing market 'could become a little less dynamic' after a bumper 2024 due to 'slower economic growth', but does not envisage a 'peak-and-crash' situation like that of 2007.

Prices will not go down, but the bank expects them to go up at a slower rate in the next 18 months.

Home values soared by 11% in 2024, although Bankinter forecasts a total increase of 5% over 2025, reducing to 3% in 2026.

'No signs of a property bubble'

Last year's price growth surpassed the historic 10% high of 2007 – a period of unsustainably-inflated property values that inevitably plummeted, leading to a long recession – but Bankinter's analysts stress the market and economic environment are very different in 2025.

“There are no signs of a housing market bubble,” declares researcher Juan Moreno.

“Whilst residential property prices have accumulated increases of 60% in the past 10 years and are currently around 10% higher than at their 2007 peak, household disposable income has increased further still - by around 30% - leading to greater affordability.”

At present, homeowners spend an average of 35% of their income on housing, which has been largely consistent over times of economic and property market stability.

But the rental market could be facing a boom-and-bust in certain pockets of Spain which are experiencing unprecedented demand and rising costs, particularly Madrid, Barcelona and coastal tourism hotspots such as the Balearic and Canary Islands and Costa del Sol.

Tenants are having to spend 50% 'or even higher proportions' of their income on housing costs, Bankinter finds, 'at least 15 percentage points more than homeowners'.

Property market 'very solid', but 'trade war' looms

With approximately 642,000 homes sold in 2024 – 'above the historic high of 540,000' – and property values having risen consistently for the past 10 years, Bankinter describes the market as 'very solid'.

But it warns that 2025 has brought 'a new variable' in the shape of a global 'trade war', with 'enormous uncertainty' surrounding export and import tariffs.

“It is still too early, at the moment, to determine the exact level of these tariffs, but what is certain is that they will indeed be applied,” Bankinter considers.

“And they will create a negative impact on the global economy: The GDP in the USA contracted by 0.3% in the first quarter of 2025, compared with 2.4% growth in the final quarter of 2024.

“According to the European Central Bank [BCE], this trade war could generate a reduction in Eurozone growth of around 0.3 to 0.5 percentage points.”

This, and unmet housing market demand, mean 'sales may slightly reduce in 2025 and 2026' – although the forecast 5% fall should not cause undue concern, in Bankinter's view: The result will be closer to a 'normal year' in the wake of a record 2024.

Data from the National Statistics Institute (INE) presented in Juan Moreno's analysis show that, aside from the pandemic year, home sales growth has been fairly consistent since 2018.

Home shortage and interest rate cuts 'push prices up'

'Factors which favour short- and medium-term home price rises', and which could lead to longer-term rebound decreases, include a 'lack of supply', Bankinter reveals.

“Our estimations show a deficit of over 150,000 homes per year,” the report indicates.

“In the next two years, fewer than 100,000 new builds per annum will be handed over, whilst demand could exceed 250,000 per year by then – of which 200,000 due to new households being created, and 50,000 through foreign buyers.

“Consequently, the next decade will see an accumulated shortage of 1.5 million homes, in addition to the half a million or so currently lacking.

“This shortage is mainly concentrated in key cities, such as Madrid, Barcelona, Valencia and Bilbao; on the Mediterranean coast; and on the islands – areas that will continue to account for the greatest population growth.”

High rental prices and reduction in availability, 'as a consequence of the holiday-letting boom and lack of legal security', have seen tenants forced to 'pay double what they did 10 years ago' and pushed rent up by 10% year on year, Bankinter states.

“Some studies show a fall in rental homes available of 56% nationwide since the pandemic, or up to 84% in major cities such as Barcelona,” according to the research.

Eurozone interest rates, having risen exponentially between 2022 and 2023, came down again in June 2025 and are predicted to drop further still by the end of this year, reducing mortgage costs and allowing property prices to rise, the study recalls.

Closing June on 2.15% - down from 4.5% in March 2024 – Bankinter forecasts cuts in region of 25 percentage points in the second half of 2025.

“We therefore estimate interest rates of 1.9% to 1.75%,” says the report. “We would not rule out rates falling below 2% by the close of 2025.”

Commercial property investments 'doing better than expected'

Bankinter reports 'greater potential' for investment returns in 'traditionally sought-after' commercial property, despite a reduction in resale value over the past few years.

Although the pandemic triggered an online shopping boom and a dramatic rise in remote working, leading to offices and retail buildings plummeting in value by over 30%, the tide began to turn in 2024, Bankinter finds.

“A sizeable investor capital injection – up by 147% year on year since 2023 – and a stabilising of ongoing returns means we expect the value of these assets to rise in 2025 off the back of a solid base,” says the report.

“Shopping centres are near-fully occupied, at around 95%, with ongoing growth in visitor numbers and retail sales up by over 4%, meaning year-on-year returns rose by 5% in 2024 – higher than expected.”

This is largely due to cultural factors: Spanish society continues to favour face-to-face shopping.

“Online trade has grown at a much slower rate than initially envisaged,” Juan Moreno admits.

“Its market share rises every year, but not as quickly as expected."

“Consumer confidence is also nearly back to normal, thanks to a slowdown in inflation and lower interest rates.”

Office space remains very much in demand, even with higher rates of remote working, due to a strengthening of the job market.

“Over 2.5 million jobs have been created since 2020, offices in premium areas of Madrid and Barcelona are 97% and 93% full respectively, and office rent prices have risen above the level of inflation – by 5.7% annually in Madrid - so we envisage increases in asset values for 2025,” the analysis indicates.

Bankinter considers now is the right time to buy for investors in retail and office premises, but believes appreciation in other popular commercial assets – warehouses and delivery hubs, data centres, and hotels - could level off in 2025 and 2026 due to a 'possible excess of supply'.

Despite the housing supply shortage in general, you can still find a considerable choice of residential homes for sale in Spain at any one time. Steady price growth means Spanish property is sound long-term investment and, if you're buying to rent, demand among tenants is very high. Take a look at our property for sale page to find out more.