The evolution of property prices in Spain

Although we are neither estate agents nor economists, Confianz regularly receives questions about the evolution of property prices in Spain. This contribution will therefore briefly explain the evolution of property prices since 2014.

Demand side: increase since 2014

After the 2008 crash, the steady recovery of the Spanish property market started in early 2014. Since then, both the number of property transactions and prices have been on an upward trend.

For instance, a total of about 550,000 property transactions took place in 2018 compared to +-380,000 property transactions in 2014. If you look at the period before the bubble burst, between 2004 - 2007, an average of 850,000 transactions took place per year.

When we divide between resales and new construction, we see that mainly resale homes accounted for the growth in property transactions. In turn, the new construction market continued to decline between 2014 and 2017, stabilising only in 2018.

The rising demand is also noticeable through the number of foreign buyers. In the first half of 2018, foreign buyers accounted for 16% of property transactions. In the 2007-2013 period, this averaged 10%. The British are the largest group with 14% of foreign buyers, followed by the French and Germans, with 8% each. However, the uncertainty over Brexit is palpable, with the British accounting for an average 19% of purchases by foreigners between 2016 and 2018. Belgians accounted for 5.5% of purchases by foreigners in the first half of 2018.

Foreigners buy mainly in the Mediterranean regions, with Alicante being the standout. In Alicante province, 48.48% of property transactions were carried out by foreigners in quarter 2/2019.

Low interest rates strengthen demand

Today's financing conditions are a key factor in the creation of property prices in Spain. On the one hand, the conditions for taking out a mortgage have improved. For instance, the average interest rate on mortgages in Spain fell from 3.1% to 2.1% in February 2019. The repayment period was also extended: 22 years in 2018 compared to 13 years in 2014.

On the other hand - in our opinion - low interest rates also stimulate the number of foreign buyers. In our experience, investing in Spain is often an alternative to the savings account. Many of our clients view the purchase of Spanish property as an investment in their own well-being, recovering costs through occasional rentals.

Read more about property financing in Spain.

Supply side: more building permits, but still surplus

Looking at a supply-side indicator, namely the number of approved building permits, between quarter 1/2014 and quarter 3/2018, we see an increase of 399% in Catalonia, 282% in the Canary Islands, 272% in the Comunidad Andalucía (including Costa del Sol and Costa de Almería), 245% in the Comunidad Valenciana (better known as Costa Blanca North and Costa Blanca South), 238% in Madrid and 222% in the Balearic Islands. In absolute figures, there were some 90,000 new approved building permits in 2018 (by comparison, almost 900,000 approved building permits in 2006).

The difference between homes completed since 2004 and new homes sold was estimated at 500,000 units in mid-2018. This housing surplus has been in decline since 2009.

Impact on property prices in Spain?

Thanks to rising demand - partly driven by low interest rates - and shrinking supply, prices have risen steadily since the first quarter of 2014. Cumulatively, prices (in nominal terms) climbed 27% between the beginning of 2014 and the end of 2018. Specifically for Madrid, the increase was 49%, for Catalonia 39%, for the Balearic Islands 37%, for the Canary Islands 20%, for the Comunidad Andalucía 18% and for the Comunidad Valenciana 16% (nominal, end-Q3/2018).

Read more about buying new property in Spain.

Read more about resale buying in Spain.


Banco de España

Colegio de Registradores

Ministerio de Fomento


LÓPEZ-RODRÍGUEZ, D. and LL. MATEA, "Evolución del mercado de alquiler en España", Economic Bulletin, forthcoming, Banco de España, 2019.


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