Housing in 2025: rising prices and rental market under pressure
Last Updated on 12 May 2025 by Urbanitae
The first quarter of 2025 has made it clear that Spain’s real estate market continues its upward trend, although it does so in a context full of contrasts and with plenty of challenges ahead. With an economy showing signs of recovery but still under the shadow of global uncertainty, the sector faces a complex reality marked by sustained demand, limited supply, and multiple external factors that condition its evolution.
At Urbanitae, we’ve reviewed the key data from the first quarter to better understand where we’re headed. You’ll find our full report at the end of this article.
Housing prices and new construction in 2025
New construction continues to be a safe haven for buyers and investors. In the first three months of the year, housing prices (both new and second-hand) rose by 2.9%, according to Tinsa. This moderate growth reflects consistent demand, especially in major cities, despite the obstacles developers face: rising costs, land scarcity, and urban planning hurdles. In response, the CNMC proposed speeding up urban development processes and simplifying planning regulations, aiming to unblock projects currently stalled by bureaucracy.
In this context, and according to Idealista, more than 65,000 new homes were sold in Spain in 2024, up 8.7% from the previous year, though they represent just 9.1% of total transactions. Madrid leads with 3,729 sales, followed by Málaga at the provincial level. Moreover, over 100,000 new builds were started across the country, 86% of which were intended as market-rate housing.
Meanwhile, the second-hand market has continued to show strong potential, with a price increase that stands out for its intensity and persistence, even in an economic climate still marked by caution. The average price of second-hand homes rose by 4.2% in just three months, reaching €2,489 per square meter—the highest quarterly increase recorded in the last decade. This trend reflects a clear imbalance between the available supply, which remains scarce in many large cities, and a demand that remains strong rather than retreating.
Home sales trends
Real estate transactions also started strong in 2025. In February, 59,682 transactions were recorded—the best figure for that month since 2008, according to the INE, with a 13.9% increase compared to the same period last year. Foreign investment, which grew by 15% during 2024, has played a key role in driving this trend, especially in coastal areas and tourist destinations. British and Moroccan buyers stood out as the most active, according to the General Council of Notaries.
However, this trend is expected to moderate in the coming months due to regulatory changes such as the elimination of Golden Visas and a possible tightening of tax conditions for non-EU, non-resident buyers. On another note, access to mortgage credit is beginning to show signs of recovery: in January, 38,058 mortgages were signed (+11% year-on-year), helped by the drop in the average interest rate to 3.08%, the lowest since April 2023, according to the INE.
Rental market dynamics
The rental market continues to climb, driven by increased demand resulting from both the difficulties of buying and broader social and labor changes. By the end of March, according to the Idealista portal, rental prices had increased 10.3% year-on-year, reaching €14 per square meter nationally. The most strained capitals—Barcelona (€23.5/m²), Madrid (€21.2/m²), and San Sebastián (€17.7/m²)—continue to lead the ranking.
At the same time, the build-to-rent model continues to gain traction as a response to the limited supply: currently, over 11,000 such units are under development, with particular concentration in Madrid, Andalusia, and the Valencian Community.
Prices and city-by-city indicators: What’s going up and what’s going down
During the first quarter of 2025, the Spanish real estate market has shown notable territorial heterogeneity, with very different trends depending on the province. According to Fotocasa data, regions such as the Balearic Islands, Madrid, and Murcia have experienced particularly sharp price increases, driven by strong demand pressure and clearly insufficient supply, while other areas have begun to see significant declines. This is the case in provinces such as Toledo, Ávila, or Guadalajara, where declines reflect weaker economic momentum or corrections after previous peaks. This growing disparity highlights the need to analyze the sector from a more local and nuanced perspective that considers the specifics of each market.
Outlook for the rest of the year
Looking ahead to the coming months, estimates from CaixaBank Research outline a moderately optimistic scenario for the Spanish real estate sector, with a projected housing price growth of up to 7.2% over the course of 2025. While this represents some moderation compared to previous years, it still reflects the structural strength of demand, particularly in major urban centers and areas with tourism or job appeal.
In parallel, residential market activity is expected to remain high, with approximately 650,000 property transactions and around 135,000 new building permits by year-end, confirming a sustained recovery in development activity—still insufficient to meet accumulated demand, but clearly on the rise compared to 2023 levels.
Check out our full quarterly report here:
