The crisis years began in 2007, and it was a few long years before both ordinary Spaniards and foreigners started buying homes again (however, investors bought in principle immediately during the downturn). However, interest in the Spanish housing market got off to an explosive start already in the first half of 2014 and sales have more or less gone straight up since then, but still never reached the same levels as before the financial crisis. However, it took several strong steps forward in 21/22 and then stood a little more still in 2023. From the end of 2024, when the ECB began to lower interest rates gradually, a new exciting chapter began with several fairly clear tendencies.

The market is mainly drawn towards Malaga 2026, and buyers are increasingly starting to prefer new development over used . However, the current energy/inflation crisis has made it more difficult for developers to complete their projects, meaning less is being built than there is demand. This will result in sharp price increases in the long term, but also great opportunities for those with capital.

The situation as it appeared in the market at the turn of the year 24/25

Comments in bold updated 4/9 2024:

Financial institution BBVA predicted a 3% increase in property prices last year (they also believe that the number of transactions will increase by 5-7% in 2024).

However, Bankinter analysts predicted a 2% correction in Spanish property prices next year.

Fotocasa believes prices will remain stable due to a solid job market, high demand from solvent investors and foreign buyers combined with a lack of supply in attractive areas. The property portal also points out that average prices are still 22% lower than their peak in 2007.

In retrospect, BBVA proved to be right. Prices continue to rise despite headwinds.

The narrow supply of properties for sale in the most attractive areas is something that has characterized the market throughout 2024. The areas where there is the greatest shortage of properties include Spain's largest provincial capitals, suburbs around the major cities and tourist areas, where foreign buyers have set the pace on the market in recent years. Such as Costa del Sol, the Balearic Islands and parts of the Costa Blanca.

Explanations for the poor supply

It is not surprising that prices are holding up in Spain, as there are so few homes coming on the market (we are now talking about popular areas for foreigners, the dynamics are different inland, etc.). One reason is that many who have bought a home in Spain in the last 10 years are happy with their purchase and want to stay. 10 years ago, more Spaniards owned homes, even in the most popular tourist areas. Perhaps the biggest reason for the poor supply of housing, however, is that in Spain people buy with the interest rate down for a long time, up to 20 years. Now that interest rates have risen, few people want to replace their home as they need to renegotiate the interest rate.

When it comes to sales to Swedes, Norwegians and certain other nationalities whose currencies have been affected, the weak krona is of course playing a role. Then, let's not forget that there was a real pandemic effect in 2021-2022! Compared to most years in the 2000s, these are still strong sales figures.

The future of the housing market in the next six months

It is difficult to say what the immediate future of the housing market in Spain will be like. If inflation and interest rates continue to fall, the market could really kick off with increased supply, sales – and faster rising prices.

We have seen several crises during the long time we have been active in Spain. A lot happens with lags, and does not follow any given pattern. After the Financial Crisis of 2008, when the economy began to rise from the bottom (although no one knew it at the time), property prices continued to fall for a period in several segments. It was during this period that the investors who earned the most in the last decade were the most active. However, many listing were not sold publicly, and mainly by actors who simply could not wait any longer to sell, despite the economy showing positive signs of turning around. Many of these listing were sold as bank repossession or “ off-market” (that is, they were not publicly listed on websites or portals). This time, however, the market for bank repossession , due to legal changes introduced during the last crisis, is completely non-existent, it must be added.

Spain's economy is expected to be the fastest growing in the Eurozone by 2025, while housing price increases have been relatively modest. In many places, they have not yet returned to 2008 levels! At the same time, it continues to sell very strongly to foreign investors who also look at aspects such as stability, crime, infrastructure, etc.

• The Spanish housebuilding company Aedas Homes, one of the largest in Spain (we received a price from them for our client management a few years ago), sold a third of its homes to foreign buyers that year. They sold almost 600 homes for a total of 265 million euros in places like Costa del Sol, Costa Blanca and the Balearic Islands to buyers from more than 50 countries, led by the Dutch, Germans, Poles, Belgians and Britons.

Price trends in the Spanish housing market

In 22/23, price increase was modest, but the rise for 2024 was significantly higher. House prices rose by 12.34 percent in 2024 and are now 12.5 percent above the peak prices from 2007.

If we look a little further back, to 2020 and just before the pandemic, average prices in the country rose by 6.5%. First there was a price drop caused by the coronavirus, and then a subsequent recovery and a sharp rise created by many seeing Spain as a perfect refuge in the new reality where you can work remotely. In addition, there are a lot of positive things happening in the country, its focus on tech and sustainability etc. combined with continued relatively low property prices have made international investors interested in this housing market.

If we study the price development in the regions that are most interesting to foreign buyers, the pattern is somewhat different. Prices have more than recovered in the Balearic and Canary Islands, almost recovered in Madrid, but are still lower in Andalusia (Marbella has however skyrocketed in price , and Malaga city is now more interesting for investors as the city is expected to follow the same price development in the coming years), Catalonia, the Valencia region and Murcia.

Andalusia is now considered a tax haven and very business-friendly

Andalusia is gradually reducing taxes on home purchases. The ITP tax on used homes is now 7%. Previously it was 8, 9 or 10% depending on the price range. The tax reduction therefore primarily stimulates homes in the higher price range. As for the fees on new development the AJD is 1.2%, previously 1.5%. Spain and Andalusia in particular are reducing taxes overall and are now one of the areas in Spain with the absolute lowest taxes. In addition, places like Nerja have introduced new laws with the aim of scaling down the otherwise cumbersome Spanish bureaucracy. All this, combined with the area's generally large investments in sustainable tourism, strengthening infrastructure and various improvements and simplifications for international companies but also individual "digital nomads", makes the area very interesting to invest in. Google recent decision to locate its important Cybersecurity headquarters in Malaga has led to talk of a "European Silicon Valley":

Read more about new tax rates and tax laws for the year in Spain.

Regarding lowered interest rates in Spain and the number of sales going forward:

In November, the market estimated that interest rate cuts would not occur until the summer of 2024, but now more and more people believe that the first cut from the ECB will come as early as March. It is also believed that there will be stronger and more interest rate cuts than expected in 2024.

In the first quarter of 2022, 164,999 housing transactions were made in Spain, which is an increase of more than 14% since the last quarter of the previous year. In fact, it is the highest figure since the beginning of 2008. There were also 30% more purchases by Swedes than in the previous quarter. At the same time, prices rose by 3.1% in the first quarter (however, prices decreased by 1.2% in Malagaarea). In the second quarter, sales increased by 8% compared to the previous year. In June, the increase was 4%. Sales then slowed down mainly in the Madrid region.

During the first half of 2022, a record was broken in the number of foreign buyers in Spain. 53% more than the previous year. A total of 72,987 homes were sold involving a foreign buyer. This is the highest figure since measurements began in 2007. Foreign buyers account for a full 20.3% of all home purchases in Spain. However, buyers held off in the second half of the year, which has been a global phenomenon. Some markets (such as Sweden) may take a long time to recover, but Spanish home sales are expected to increase significantly again from the first or second half of 2023. Sales in the last quarter fell by around 10% (however, the decrease in non-Spaniards was only 1.2%) compared to the previous year, but it is too early to draw conclusions about this, as it was expected. The year before there was a huge pandemic effect.

The final statistics for last year were published on March 23. Sales to foreign buyers are at a record high. The yearbook states that total foreign demand was 13.75% of the market (in Malaga foreigners account for almost 35% of purchases!), which would mean 88,858 sales, while the latest quarterly data suggests 94,481 sales and 14.62% of the market, up 58% compared to the previous year. There is continued strong foreign demand for property in Spain, although quarterly figures from the registrars also point to a slowdown in the growth rate in the second half of last year, suggesting that 2023 may not be as good given rising interest rates. However, the Spanish market is in a strong uptrend in the medium to long term compared to many other global markets.

On an annual basis in 2022, prices rose by 7.9% in used and 8.1% in new development in the first half of 2022. Overall, housing prices in Spain increased by 8.8% throughout the year (in Q4 the increase was 2.5% so the increase is continuing). The pandemic/war/inflation (which is lower in Spain than Sweden, however) did not slow down the rising price trend that has been going on since 2014. The Price of Spanish homes fell significantly since the crisis in 2008 but is still 18.7% down in 2023 compared to the record level in 2007. Since then, a lot of positive things have happened in the form of regulations, expansion of infrastructure, investment in eco-tourism and hiking trails, etc. The Spanish housing market will have a strong 20s. The construction agency APCESpaña believes that it is mainly the desire for new development that is pushing up prices, and of all the homes that are ready in 2023, 80% are already reserved !

As for the concerns about inflation and delivery difficulties in the construction industry, they have eased somewhat. We have spoken to builders who say that prices and delivery times are slowly but surely starting to “normalize”. However, expect delays in new projects. It will be a long time between the ears and the bread for those who do not like the range of properties that are now for sale (incl. off-plan ). We also believe that, not least because demand is still high, that price increases on the projects that are put up for sale from next year will be significantly higher in price .

Spain recovered quickly after the initial paralysis associated with the quarantines during the pandemic.

Already in June 2021, 88.4% more homes were sold than in the corresponding period the previous year. In absolute terms, the region showed the highest sales figure since June 2008! A total of 565,523 properties changed hands on the Spanish housing market in 2021. This was the the highest number in 14 years.

In particular, during and after the pandemic, we saw a strong increase in sales in the luxury segment and in terms of new development . We also receive reports from colleagues around the country who are selling new development projects to Spaniards in shorter times than we have seen in many years. In one of our latest projects at the end of the year, we also sold for the first time to several Spanish investors. They have noted how profitable it is to buy off-plan in recent years. It is positive that sales are increasing so quickly to both foreign and Spanish buyers, but watch out for price developments. It may also go faster than expected. At the end of August 21, it was noted that housing prices were 4.9% higher in July than the same month a year before. Interest is also still high among foreigners despite the pandemic, even among Swedish buyers who are also getting younger.

Strong rental

The hotel owners’ association showed that occupancy rate figures for July 2022 landed at 86.29%, which can be compared to 2019 when the figure was 84.2%. It is mainly Nerja and Torremolinos that beat 2019 as they raise the average. Nerja had the highest occupancy rate with over 90%% (compared to Marbella and other resorts on the west side which are just over 80%).

For four consecutive months, from June to September 2023, Nerja had a hotel occupancy rate of over 90 percent. The city's tourism manager: "Nerja has become a benchmark in the area. In terms of nationalities, the city has seen a strong influx of British, Spanish, German and Irish tourists.

Malaga leads the development

In Spain, there is now a lot of writing about the aforementioned exceptional development in Malaga, which at the beginning of the year was only behind Barcelona and Madrid in investment grade. In addition, figures came out during Q4 indicating that Malaga had overtaken Barcelona for the first time ever in the number of newly produced properties sold .

Rental prices rise in Malaga amid strong demand from foreigners

Rental prices are rising sharply in the province of Málagaand Costa del Sol. Between 22 and 23, rental prices increased by 23 percent and ended up at 13.22 euros per square meter per month. Compared to 2007, rent is now over 60 percent more expensive, when it was around 8.5 euros per square meter.

Increased prices for materials, and increased demand

At a major meeting between builders and a major bank in the fall of 2021 (due to construction start for one of our projects), it was flagged that the prices of certain materials would increase by as much as 40% by the beginning of 2022. They were right. This prophecy was thus made long before Russia invaded Ukraine. The same analysts now say that the prices of materials will fall sharply and that sales of new projects in Spain will boom in the future. However, the uncertainty associated with inflation has resulted in projects that are in the planning stage being delayed. Our advice is to buy new development early in the year as price increase can be substantial towards the summer and autumn. As for used properties, we believe that the price picture will be relatively unchanged as demand for used is becoming increasingly weaker. The stock is simply starting to wear out. Also consider that relatively few homes were built after the 2008 crisis until the Corona pandemic. The situation after Q1 in Spain is that many banks have become increasingly cautious and promoters are finding it difficult to obtain financing despite strong demand for new development . Historically, this tends to mean that when the underlying problems are resolved (all that remains is a signal from the ECB that interest rate hikes have culminated, so watch for that sign) prices tend to rise high and fast.

New Development and luxury properties are what loom after the Corona crisis

We are continuously talking to homeowners, developers, investment funds, bank managers, landowners, etc. and gradually updating the situation on the Spanish market during and after the Corona/inflation/electricity crisis. We are also constantly negotiating with both landowners and construction companies about various projects and thus have a good overview of the situation – from the banks' terms, down to the price on the nail! There are a lot of good opportunities for those who are awake in 2025!

Write to info@spanskafastigheter.se for more information about off-marketlisting and new development , and which segments and markets we believe should be invested in 2025.

New Development and luxury properties got sales going

The market for new development , like virtually everyone else, has been relatively resilient during the inflationary years, but demand is rumbling in the background, as the pandemic years have shown.

Sales started faster than expected after the pandemic shutdown - already in early June 2020, before the country even opened its borders, and it was driven by temporary price reductions of 10-15%, in some cases more than that. However, most sales with price reductions took place “ off-market” (i.e. the owner did not want to publish the price reduction publicly) and there was not a high volume on these listing . Since then, prices have more or less remained static on many listing while they have risen sharply on luxury properties (big house) which has become increasingly in demand. Above all, however, as mentioned, there is a great domestic and international appetite for new development .

According to statistics from the real estate institute Registradores (24/9 2021), sales of new development increased by 50% on Costa del Sol compared to the previous year. Sales of used homes have fallen by 4.6% during the same period, which can be explained by the fact that the stock is starting to become old and worn out, but also that prices have only fallen by 0.5% despite the crisis (however, prices have risen slightly since that report).

We agree with the buyers. It is undoubtedly new development that applies going forward, but there are of course still good buys to be made for those looking for used as well. Even though most people are now looking for new homes, the supply is limited. There will therefore be a gap (as many developers were low during the crisis, at the same time as once they realized that demand is stronger than in over a decade, there was a shortage of materials, inflation and labor shortages) until newly produced homes in good locations come out in 2024. Also expect that the prices for these will be significantly higher than what was for sale in 22/23

A short but intense buying window in the new development segment will open wide in 2024. This then concerns projects whose plots prices were negotiated during the crisis, before it was realized that it would not be long-lasting [in terms of the impact on the housing market], and which are managed by talented teams who managed to get stocks of materials before the material shortage hit. Expect a strong risk of sharply increased prices on new development from summer/autumn 2024 onwards.

Now buyers want new and fresh and environmentally friendly so The situation regarding used listing is similar to the summer and fall of 2019, as sales of these slowed down significantly and several listing were only sold with price reductions of around 15% (compared to the previous year). Many older homes simply need to be reduced in price to be sold, but few sellers seem willing to meet buyers' demands. We'll see if this changes during the year, but we see no indications of this.

Most expect sales to pick up again along with the rest of the economy in Europe as early as the first half of the year.

At the beginning of the Corona crisis, it was believed that a not insignificant proportion of housing, in various segments, such as holiday homes, luxury properties and smaller hotels would be sold at a reduced price for a period to comeHowever, that didn't really happen as the economy is more robust than expected.

Which areas attract the most buyers after the recent crisis?

Above all, just like after the last crisis, Nerja (No other Spanish city attracts as much interest from investors as Swedish investors, due to the high occupancy rate and positive development) and the interest has not diminished because the municipality has initiated several infrastructure investments on beaches and nature parks and culture during the crisis. They have begun an upgrade of hiking trails and streets, as well as the construction of a new large health center. Nerja is in an almost uniquely good position, and it will be exciting to follow its development over the next 10 years. See the top picks in Nerja here and now.

However Malaga city comes out strongest of all and will be the most attractive resort in southern Spain for foreign buyers from 2024. Read more about Malaga's development in this article.

As far as it goes Marbella It seems that interest in the area could grow again, provided that prices fall. Right now the area is overshadowed by Malaga and the eastern Costa del Sol. Prices need to come down, and more interesting projects with new development need to be launched on the western Costa del Sol to make it really interesting again.

Torrevieja and the rest of the Costa Blanca are more difficult to interpret. There were a lot of unsold properties even before the crisis, and several places have been struggling with economic problems for a long time. The crisis could cause a lot of damage, but we will simply have to wait and see what happens.

Prices in Spain rose steadily for 10 years but were still 30% lower than before the 2008 crisis when the pandemic hit

Official figures from the authorities show how sales fell during the crisis year of 2020. It fell, of course, but not as much as analysts had expected under the circumstances. In the third quarter, sales to foreign buyers fell by 24.3% compared to the previous year, which should be compared with the second quarter when sales fell by 50%. In any case, the pandemic year can be considered an anomaly, a statistical outlier that does not really say anything about the development. The advice is to study the figures in a longer term and, above all, keep in mind that internationally there is talk of a boom in “second home” sales in the wake of more and more people working remotely and having the opportunity to live in other countries if they wish. In the Forbes list (November 2020) of the 20 most attractive destinations in the world, three Spanish cities ended up in the top 20 list: Malaga, Madrid and San Sebastian. This will drive up prices for the most attractive homes in the long term as international buyers are looking in roughly the same segment: " sea view or maximum 1 km. from the sea, minimum 2 bedrooms, maximum one hour from the airport, terrace, close to everything but still secluded".

Prices in 2019 were a little more stable compared to the previous year. However, the reputable credit rating agency Moody's expected prices in Spain to increase by 5.5% in 2020. Of all the countries they analyzed in Western Europe, Spain had the housing market that was expected to increase in value the most. Madrid and Barcelona were the main ones to take off. In retrospect, Malaga developed the best. Interestingly, this was also something that happened in connection with the crisis of 2007/2008. Costa del Sol is said to always be the first to enter and the first to exit a crisis.

The prices were still more than 30% lower in 2019 than they were before the 2007 crisis (at the beginning of 2024 they are about 22% lower) This fact, combined with continued low interest rates and the end of Brexit (many waited to invest because Brexit put everything in limbo), would, according to most analysts, lead to the number of purchases by foreigners in Spain breaking records again in 2020. For Swedes, interest in Spain slowed down somewhat even before Corona, but then gained renewed strength. We believe this has several reasons. First, that many feel that there have been so many crises in the world in the last ten years that "it's enough to wait now. Now we buy" and that the Corona crisis triggered new projects with interesting new development . In addition, the krona strengthened against the euro at the same time as the Swedish housing market recovered after a period of hibernation. This means that Swedish homeowners can more easily free up capital to buy a home abroad.

Analysts believed that sales to foreign buyers would increase in 2020, before the crisis hit. However, the crisis has accelerated interest and exceeded pre-Corona expectations (although there was something of a wet blanket over the market in 2023 due to interest rate hikes), and the next five years in the Spanish housing market could, according to many, have an unprecedented development. Especially for Malagaarea.

Housing Cooperative are the solution for Spanish new development

A cloud of concern according to the Spanish analyses is that the prices of plots and construction costs have been skyrocketing since 2016 onwards. The same thing happened at a rapid pace from the mid-80s (which resulted in a real bubble at the end of the decade). At the same time, the appetite for new development is great and more and more people are building ever larger projects, at ever higher prices. This leads to the possibility of “mini-bubbles” in oversaturated markets. Banks are thus becoming increasingly restrictive in entering and financing new projects with new development . This caution from banks to finance new projects has intensified after the economic downturn in the wake of the epidemic. Those who can get their hands on new development that is in the final stages or who have new development that has recently been completed are thus sitting on a golden egg as the demand for new development will significantly exceed the supply for a relatively long period. In cases where banks step in and invest, they require that the projects are more or less completely sold out before they give them the green light. This is an unsustainable situation and something must be done. More and more Spanish players are therefore looking, among other things, at the proven Housing Cooperative er project modelThis project solution means depressed prices of more than 25% and it is considered to be legally and financially much safer than regular promotions for both the individual buyer and the banks and insurance companies that guarantee the buyers' payments.  Read more about housing cooperative here.

About the development of recent years below:

In 2018, prices for used homes rose by just over 7% ( new development prices rose by 6.1%). This was the highest increase since the third quarter of 2007. In the 5 years before the Corona crisis, the value of a Spanish home increased by an average of 5% per year, and if you take into account reduced interest costs and the fact that the price of rentals increased by 50% during the same period, this meant a net return of over 10% for those who bought the right home in the right area at the right time.

In 2017, 53,259 homes were sold to foreigners. The previous record from 2007 was 33,000 sales.

Sales to Swedes decreased by 7% in 2018 (in the first half of 2018, however, more Spanish homes were sold to Swedes than ever before) due to the uncertainty in the Swedish housing market and the low value of the krona. However, this did not affect the Spanish housing market, which continued to push ahead unconcerned. The number of purchases by foreigners increased by 5% between July and September, and overall the number of sales increased by 11.9%. In 2019, the figures were very up and down, but still pointed upwards. In the first two months of 2020, many brokers reported that Swedes had started buying at a record pace again. Then Corona came and sales hit a wall when Spain was in quarantine. Then it went straight up again, already from the summer. Many analysts believe that price increase on homes in Spain will be gradual and long, similar to what happened in Sweden after the housing crash in the early 90s.

In fact, development is happening so quickly that the Spanish state, starting in 2019, established a new authority to prevent real estate bubbles. Around 2012, many people, including us, made the assessment that the market in Spain would rise rapidly and then have a long, steady price development similar to what Sweden had from its property crisis in the early 90s onwards. However, collective memory is short and prices and the number of new development projects are rising faster than expected. The new state supervisory authority will prevent uncontrolled speculation, while the central bank will receive greater resources to control the flow of credit.
It is difficult to predict what the real consequences of the new authority will be, but we would think that this could mean, among other things, increased taxes on new development within a few years.

Right now, however, there are no tax increases on the horizon, while loan fees have been lowered, and homes are being valued increasingly higher (which affects the loan amount).

The housing market feels safer than stocks – especially when there is inflation

Many investors are starting to feel exhausted by the uncertain and volatile stock market and are looking to real estate as an alternative. Investors have also long viewed real estate investments as a “safe haven” in times of rising inflation.

Thomas J. Thornton, Jefferies, head of US equity product management, had the following to say about the American housing market (which is in many ways similar to the Spanish one, they have followed the same cycles) a year ago:

"Other than during the GFC (Great Financial Crisis), home prices have kept rising even during recessions, probably because rates fall, the vast majority of people retained jobs and household formation continues" ... "This could be a particularly big cycle for household formation owing to the millennials".

CNBC picked up on Jeffries' comments, adding "It [the housing crisis] was the center of the last crisis, but before that housing prices tended to hold up and even rise modestly during an economic downturn as mortgage rates fell in tandem with interest rates. If history is any guide, the housing market could be the unlikely safe haven in the next recession once again."

Note. Read our great article about everything you need to know to invest in Spain: statistics on rental income, laws and regulations around rentals, etc.

Read also:

Overview new development Costa del Sol