Spanish property prices to soar 7% in 2025, says BBVA bank

PROPERTY prices in Spain are expected to leap by over 7% in 2025, according to research by a leading high-street bank.

A combination of spiralling demand, low supply and an expanding workforce, together with plummeting Eurozone interest rates, mean the trend that started two years ago is set to continue.

The monthly Property Market Observatory for May 2025, produced by the BBVA, says a falling Euribor rate – leading to cheaper mortgages – sparked an 11.7% hike in home sales last year.

Bank forecasts for 2025 remain consistent with this scenario, suggesting sales will increase by another 9%.

Residential property market values went up by a record 5.8% in 2024, and will rise yet again this year by around 7.3%, says the BBVA.

A total of 717,600 homes changed hands in 2024, following a slowdown in 2022 and 2023 as inflation soared and, in response, the Central European Bank (BCE) upped interest rates from below zero to over 4%.

Now, with rates just above 2%, the BBVA predicts at least 780,000 homes will be sold in 2025, rising to 800,000 in 2026.

What's on the cards for 2026?

Whilst property market activity is likely to grow year on year by 2.8% in 2025, it is expected to slow down a little the following year, to 1.8%, the BBVA report concludes.

Market values will start to plateau due to rocketing prices reducing accessibility – the increase from 2025 to 2026 will be around 5.3%.

Although more home sales are predicted in 2026 than in 2025, actual year-on-year growth will contract slightly, to about 5%.

Even though the BCE is expected to continue cutting interest rates in 2025 and 2026, current global political instability may lead to greater caution among would-be buyers, meaning growth will continue, but be generally less pronounced.

Barriers to building more homes

An ongoing shortage of affordable housing, a growing number of single-person households, and greater individual financial confidence have triggered unprecedented demand, the report highlights. But supply is not keeping up: New builds are typically more expensive than pre-owned homes, and availability of either is limited.

Although planning permission granted for brand-new housing projects was an impressive 16.7% higher in 2024 than in 2023, the overall number of developments under construction is relatively small.

This year is expected to see a further 16% jump in planning approvals, with a minor slowdown in 2026 bringing a 13% year-on-year rise.

The bank's research cites a shortage of manual labour, higher-priced building materials, and the extensive amount of time needed to prepare land earmarked for development – often months, or even a year or more – as factors holding back work on much-needed new estates.

Also, developers are still facing hurdles when applying for finance, and suitable building land is in short supply, the BBVA reveals.

Healthier economy and higher net migration trigger demand

Meanwhile, Spain's economy continues to show strong signs of growth – it's forecast to hit 2.6% this year – and the job market is becoming much healthier.

More and more foreign workers are being registered as economically-active, and net migration has been steadily increasing – a sure sign of the country's financial stability, and necessary to maintain prosperity amid Spain's ageing population and low birth rate.

The national headcount is on the brink of crossing the 50-million barrier for the first time in history, largely through migration – and its current 49.1 million is predicted to swell to 52 million by the year 2030, according to the BBVA.

Although this is positive news for Spain, it means at least an additional 1.4 to 2.1 million homes will be needed by then to accommodate everyone, the research finds.

Business is booming in the Spanish property market and rising home values mean buying continues to be a sound investment. Have a look at more than 200,000 properties for sale, where you'll find options to suit every budget.