How Climate Change Is Changing Housing Prices in Spain
Last Updated on 10 December 2025 by Equipo Urbanitae
Increasing heatwaves, floods, and rising temperatures are becoming part of our daily lives. This temperature rise affects not only our well-being but also the real estate sector. A recent study by the Complutense Institute of Economic Analysis examines the impact of high temperatures on property values and shows that rising temperatures are slowing housing price growth in areas most exposed to heat, while cooler regions are becoming more attractive to buyers and renters. This phenomenon is not isolated; it is part of a broader set of climate and environmental risks already considered when valuing a property.
One of the latest trends is that, in addition to the cost per square meter, another important factor is increasingly influencing purchase decisions: temperature. Heat causes housing prices to drop in territories where it is most extreme. This is the main conclusion of the study, which is based on fifteen years of data and an econometric model that includes factors such as population growth, labor market evolution, new housing construction, and tourism activity. The study analyzes how temperature affects housing prices across mainland Spain. According to the results, each additional day above 35°C compared to the previous year is associated with an average decrease of 0.08% in sales prices and 0.15% in rents within the same province.
Energy efficiency… and financial efficiency
At the same time, energy efficiency is becoming one of the most important factors when deciding to buy a property. The latest report from the Bank of Spain highlights the relevance of this factor in determining property prices. Homes with good energy efficiency sell at higher prices because they consume much less energy (a home with an A rating uses up to 90% less than a G-rated home) and provide greater comfort: better insulation, temperature retention, and healthier air quality. They also pollute less and comply better with current regulations. This effect is particularly noticeable in colder areas, where an energy-efficient home can significantly reduce heating costs.
Another factor to consider is proximity to the coast, which, while traditionally considered a value booster, can become a disadvantage if the property is near rivers. With climate change, aspects such as flood risks from river overflows must be considered to avoid disasters like the one in Valencia last year.
The evaluation of climate risks when buying, renting, or appraising a property has become so important that the Ministry of Economy has modified real estate appraisal regulations to incorporate factors such as energy efficiency and the principle of sustainability. According to recent legislation adapting the framework to European climate risk standards, appraisals must consider the 17 risks applicable to the residential market, as outlined in the European Central Bank’s Guide to Climate and Environmental Risks and the European Union Taxonomy. These include physical risks such as rising average temperatures, sea-level rise, heatwaves, wildfires, droughts, floods, and storms or cyclones.
Declining Areas vs. Areas Gaining Value
New movements are emerging in the Spanish real estate market. Temperatures vary, and some areas are warmer while others experience more extreme climates. Madrid, for example, is one of the regions most affected by extreme heat and also the community where the highest percentage of people are willing to relocate for climate reasons—39%, according to Fotocasa. Southern and eastern regions of the mainland, such as Andalusia, Murcia, the Valencian Community, and parts of Castilla-La Mancha, are also affected.
On the other hand, a recent CaixaBank Research report states that cooler provinces “benefit” from the heat elsewhere, with a 0.16% increase in sales prices and 0.3% in rents. These provinces are mostly in the northwest, which generally has a cooler oceanic climate. Home sales are growing fastest here: 22.3% in Galicia, 20% in La Rioja, 19.4% in Castilla-La Mancha, 18.6% in Asturias, 16.4% in Cantabria, 15% in Navarra, and 13.8% in the Basque Country.
Implications for Investors, Homeowners, and Buyers
Climate change will affect not only our well-being but also the real estate sector and property values. To be prepared, investors, buyers, and homeowners will need to adapt to this new paradigm.
Firstly, cooler areas are expected to appreciate. Just as tourism in northern regions is seeing a rebound according to the 2025 IIIT Business Tourism Valuation and IVT Year-End Perspectives, the real estate market will also benefit, since tourism and real estate often go hand in hand: visitors arrive first, discover the area, and then many decide to buy property.
For the resale market, adapting to new energy efficiency standards will be key to maintaining property value. According to recent government and real estate reports, Spain needs to invest around €39.35 billion by 2030 to renovate residential and tertiary properties to reduce energy consumption in line with the European Energy Performance Directive (EPBD).
For investors, this scenario sends a clear signal: those who prioritize energy efficiency and sustainability will not only contribute to climate and social goals but will also align with key regulations and public incentives. This makes sustainable projects, both renovations and new constructions, a solid strategy against emerging risks: with expected higher energy requirements, rising energy costs, and growing demand for efficient homes, sustainability is the future of the sector.
