Quick snapshot: the "bounce back" has been expansion
since mid-2024, there seems to be a noticeable turnaround in the Spanish housing market: the INE housing price index for Q2 2025 shows an annual growth of 12.7% (new: 12.1%, second-hand: 12.8%). On a quarterly basis, the dynamics were also +4.0%. This momentum is no longer a mere base effect but a broader cycle start.
Who is buying? The weight of foreigners is persistently high
The share of non-resident buyers in transactions has stabilised in the ~14-15% range; registrar data show ≈14.4% of transactions in the four quarters to Q2 2025, or roughly 100,000 sales to non-resident buyers. The historical average from 2006 to 2024 was ≈14.9% - so foreign demand has structurally retained its role.
Forecasts: even higher in 2025
Macro and sector forecasts for 2025 call for national price growth of around 5-7%, sales growth of ≈9% and double-digit building permit growth (≈+16% in 2025). Investment sales are already up ~20% in 2024 and remain a prime target due to supply constraints in the "Living" segment. BBVA Research +1
Context: the MIVAU (valuation-based index) has projected a rise of ~5.6%-5.9% for 2024-2025, in line with the above range. CaixaBank Research
What supports the cycle?
Funding: the pass-through from previous ECB rate cuts and the lowering Euro interest rate are gradually improving credit conditions, although transmission is delayed. The ECB expects falling financing costs to support consumption and investment in the period ahead. European Central Bank +1
Supply constraint: housing construction has not kept pace with demand for years; only a partial catch-up is expected even by 2025 (with permits rising), which is price supportive. BBVA Research
International demand: in the Mediterranean regions (Costa Blanca, Costa del Sol, Balearic Islands), lifestyle-motivated purchases, telecommuters and the "second home" segment provide a stable support. The historically high proportion of foreigners is not a one-off phenomenon. CaixaBank Research
Where do we see the biggest movement?
The most expensive cities and coastal belts continue to fill up, but rapid price rises are causing a spatial shift: some buyers are turning to peripheral municipalities and north-western regions with better supply/price ratios. This "dispersion" is also reflected in the geographical pattern of transactions. CaixaBank Research
Risks and disincentives
Credit rate spreads: market pricing of interest rate cuts trickles down more slowly into mortgage rates; this may dampen demand in the short term. European Central Bank
Affordability: deterioration in the wage-price ratio in some large cities may create a demand ceiling.
Regulation/self-government supply: scarcity of land and permits, long lead times.
What does this mean for buyers and sellers?
Buyers: in the most sought-after zones, expect quick decision windows rather than wait-and-see; alternatively, look at secondary locations and quality second-hand rather than new-build.
Sellers: the first half of 2025 could be a good time to sell, especially for properly presented (with legal-technical documentation) properties, given the improvement in liquidity and the durability of foreign demand.
Investors: rental yields and longer-term demographic/lifestyle trends mean that the "Living" segment remains the preferred segment; value-added renovation and energy rating are key factors in the face of yield pressure. CBRE
Sources
INE - Housing Price Index, 2025 Q2: 12.7% annual growth; quarterly +4.0%. Instituto Nacional de Estadística CaixaBank Research - expansion phase, territorial dispersion; foreigners ~14.4% (~100,000 sales). BBVA Research - 2025: +9% sales, +16% permit, +7.3% price forecast. CBRE Outlook - 2024 +20% investment; 2025 ~5.3% price increase forecast. ECB/euribor transmission and consumption/investment outlook.