The Spain property market is experiencing very strong growth. Data from Q2 2025 show national housing price growth of +12.7% year-on-year (according to the National Statistics Institute (INE)), the strongest annual increase in more than 18 years. Preliminary findings from the Tinsa IMIE Local Markets index for Q3 2025 indicate a year-on-year increase of approximately +11.7% — underscoring continued double-digit momentum.
Content
State of the Spain Property Market – Key Trends
National Price Trends
The INE data for Q2 2025 confirmed the market’s exceptional strength. Beyond the +12.7% annual growth, there was a strong quarterly increase of +4.0% (vs. Q1 2025).
In Q3 2025 (data via Tinsa), growth moderated very slightly to ~11.7% year-on-year, with the average price of a finished home in the country reaching ~€2,018/m² (Tinsa estimate).
Here is a quick overview of the latest data:
| Period | Annual Change (Total) | Change (New) | Change (Resale) | Notes |
| Q2 2025 | +12.7% | +12.1% | +12.8% | Source: INE |
| Q3 2025 | ~11.7% | – | – | Source: Tinsa. Real growth (adj. for inflation) ~+8.6% |
Second-hand Housing vs. New Builds
The Q2 2025 data shows that second-hand housing (+12.8%) saw slightly stronger growth than new builds (+12.1%), indicating broad demand pressure across all available stock.
Regional Differences
Regional disparities are enormous. While Q2 saw the fastest growth in Murcia (+14.6%) and La Риоха (+13.7%), preliminary Q3 data (according to the Tinsa report) shows strong growth in key investment hubs: Madrid (~+19.4%), Malaga and Alicante (≈+15.3%), and the Balearic Islands (≈+14.8%).
Market Drivers: Demand and Supply
Demand (Foreign Buyers)
Foreign-buyer presence remains robust. According to industry analysis by Feeling Spain, foreign purchasers represent roughly 14.4% of residential transactions in several key regions — though national-wide figures are not comprehensively published.
Supply Constraints
The market faces significant supply-side constraints. While prices rise, transaction volume shows signs of stabilization, signaling a shortage of available properties. Market commentary (Feeling Spain) suggests that while building licenses are up (+19.4% y/y), actual completions have fallen (-7.9%) in some regions, further tightening the market.
Rental Market and Yield
Strong rental demand keeps yields attractive. It must be noted that no consistent national official series for rental yields is available.
Reports like the Global Property Guide place the average gross rental yield at ~5.6% (Q1 2025). However, according to local market specialists, indicative gross yields in select neighborhoods (e.g., in Valencia) may reach 7-8%; these, however, are local estimates, not national aggregates.
Investment Hotspots: Where to Invest in Spain?
Location choice is more critical than ever.
Madrid (The Capital)
- Why: The economic center, guaranteeing constant long-term rental demand.
- Prices: Confirmed by Q3 2025 estimates—a ~+19.4% year-on-year growth, indicating massive pressure and a high barrier to entry.
- What this means: High capital entry, but lower-risk, blue-chip stability.
Costa del Sol (Luxury & Tourist Hub)
- Why: Focus on the luxury segment and holiday homes.
- Prices: Malaga province posted ≈+15.3% annual growth (Q3 2025 estimate), confirming its hotspot status.
- What this means: High dependency on tourism, but high potential for short-term rental yields (if regulations are met).
Valencia (The Rising Market)
- Why: A combination of quality of life, beaches, and a booming tech sector.
- Prices: While provinces like Alicante (part of the Valencian Community) report ≈+15.3% growth, data for some districts in Valencia city show even faster growth.
- What this means: Lower entry barrier than Madrid, higher growth potential, but potential regulatory risk.
Key Factors for Foreign Investors
The End of the Golden Visa and Alternatives
This is the key change for 2025. Spain has terminated its Golden Visa (residency for a €500,000 property investment), with the final deadline for new applications being April 3, 2025 (existing holders can still renew).
The effect on the overall market is minimal—industry commentary suggests the program accounted for well under 1% of all property transactions in the country. For non-EU investors, the focus now shifts to the Non-Lucrative Visa. It’s interesting to compare this to alternatives like the Golden Visa in Dubai.
Taxes and Purchase Costs
Costs are a significant factor.
- Transfer Tax (ITP): Varies between regions, typically between 6% and 10% (for second-hand properties).
- VAT (IVA): 10% on new builds.
- Annual Property Tax (IBI): A local tax,usually low (0.4% – 1.1% of the cadastral value).
- Capital Gains Tax: Progressive, starting at 19% for non-EU/EEA residents.
Purchase Process
The process is straightforward but requires professional help. Key steps include obtaining a Spanish identification number (NIE), opening a bank account, and the mandatory involvement of a public notary (Notario). Hiring an independent lawyer (abogado) is highly recommended. This is a standard part of any guide to investing in property abroad from A to Z.
Risks and Forecast for 2026
Risk Analysis
Investors must monitor several key risks:
- Affordability Risk: Rapidly rising prices are straining affordability for domestic buyers. Given the average price/m² of ~€2,018 and double-digit growth, monthly payment burdens are rising.
- Interest Rate Risk: Higher mortgage interest rates (Euribor) increase the cost of financing.
- Regulatory Risks: Some regions (like Catalonia) have introduced rent caps in “stressed zones.”
Expert Forecast for 2026
Given that growth in Q3 2025 is still ~+11.7%, a market consensus for 2026 is difficult to find.
However, this is a projection/scenario based on current affordability pressures and supply constraints easing: many analysts model a normalization of growth to around 5%-6% in 2026. A drop from 12% to 6% is not a crash, but rather a return to more sustainable levels.
Conclusion
Investing in the Spain property market in 2025 remains a strategically smart move for investors who are selective about location, cost basis, and rental/investment yield characteristics. The end of the “Golden Visa” has had almost no impact. The market is hot, and the key to success is selective location choice—with a clear focus on markets with proven growth like Madrid, Malaga, and Valencia.
You might also like:
- Hidden Costs Compared: What’s the Real Cost of Buying Property in Italy vs. Spain?
- Investment property vs. own home: what’s the difference and why is it important?
- Green Dubai 2040: How Parks Will Increase Your Property’s Value
This post is also available in: Български
