Housing Price Forecast for 2025: What to Expect

A comprehensive analysis of factors shaping the Spanish real estate market

The evolution of housing prices continues to be a subject of significant interest, especially given the current context of limited supply and a market under constant pressure. In 2024, the real estate sector became a focal point of political and media discussions due to soaring sale and rental prices, coupled with a mismatch between supply and demand. Looking ahead to 2025, experts predict that the upward trend in prices will persist, driven by both structural and short-term factors.

Key Drivers Influencing the Real Estate Market in 2025

-Shortage of developable land:
The lack of urbanizable land remains one of the biggest challenges for the sector. Developers highlight that this scarcity hampers the construction of affordable housing in high-demand areas such as Madrid, Barcelona, and coastal regions. The absence of clear regulatory frameworks exacerbates costs and limits the available supply.

-Interest rate cuts:
Throughout 2024, the European Central Bank reduced interest rates several times, bringing them to 3%. This favorable financing environment has stimulated the mortgage market, attracting new buyers and putting additional pressure on prices.

-Population growth:
Population increases due to immigration play a central role. This includes both high-net-worth individuals investing in luxury properties and workers turning to the rental market. These segments contribute to rising housing demand in an already strained market.

Notable Market Figures from 2024

-The average price of second-hand homes reached €2,244/m², marking a 10.7% year-over-year increase.

-Rental prices grew by 11.1%, averaging €13.3/m² per month, with 23 capitals recording all-time highs.

Expert Predictions for 2025

-Bankinter: Predicts a 5% growth in housing sales prices, followed by a moderation to 3% in 2026.

-Solvia: Projects increases of 4% to 5% in sales prices.

-For rentals, a moderation is expected due to the implementation of the Housing Lease Reference Index (IRAV), capping increases at 2.2%.

Outlook for Rentals in 2025

Despite efforts to boost rental housing availability, high demand and restrictive measures such as rent controls present ongoing challenges. Rental prices are expected to continue rising, especially in cities like Madrid, Barcelona, and Málaga, albeit at more moderate rates.

Is a Housing Bubble Possible?

Although access to housing remains a challenge for many, experts rule out the possibility of a housing bubble in 2025. However, they warn that without effective policies to increase supply, the market could become even more restrictive in the coming years.