This last quarter, ending on July 2025, marked the 45th quarter, or 11 straight years, of continued growth in Spanish property prices.
Moreover, as explained in previous articles, Spanish property prices have reached all-time highs with no signs of abatement.
As highlighted previously, there is a supply crunch in new build property (off-plan), which causes property prices on new construction to appreciate by two digits a year all over Spain. However, the novelty this last quarter is that buyers are now turning their eyes to resale property due to the chronic shortage of new construction.
Before, resale property was growing at a healthy national average of 8%, whereas off plan was appreciating by two digits. Now, because buyers are locked out of buying new build property, the demand for resale property has outpaced new builds, leading to a sharp increase in resale prices of 12.8% year-on-year, which is bonkers.
In plain English, because so few new build properties are being built in Spain (for all the reasons outlined in a previous article) this has led to a massive price spike; frustrated property buyers are now looking with renewed interest at resales, as they are much cheaper and abundant when compared to their off-plan counterparts (by as much as 44% cheaper per m2). This change in demand explains why resale property prices are now growing faster than new construction.
The ongoing off-plan supply crunch goes on to explain why, according to the latest sales figures published by Spain’s Bureau of Statistics (INE), resale property has officially overtaken off-plan in price rises.
Source: Newspaper La Razon
In conclusion: The chronic shortage of new build property in Spain, artificially induced by the government (Spain only builds 87,000 new homes a year when over 500,000 are needed) has priced out most buyers, who now look at resale property with a renewed interest. This is because resales are 44% cheaper than off plan on average, which has sparked a massive demand as gleaned in the latest published sales figures.
In other words, contagion of high property prices in off plan has spread over to resales as unchecked demand has spilt over to resale property, greatly exacerbating it, which translates into a sharp rise of resale property prices.
Interestingly, this market behaviour in the real estate market closely mirrors what is happening in the rental market. Concretely, between long-term rental contracts and holiday homes (short-term contracts). Again, because of the government’s strong interventionism in long-term tenancies, scared landlords moved en masse over to holiday homes, which are deemed far more secure and profitable. As a result, the Spanish government started a war against tourist rentals in a bid to redirect landlords again towards long-term contracts. As a result of the government’s new overzealous measures (NRA code, new holiday home registry, empowering community of owners to ban new tourist licences, aggressive and intrusive trawling of holiday home ads in property platforms, imposing large fines on landlords, etc) has drastically reduced the holiday home supply (creating yet another supply crunch) leading again to a massive spike of prices in holiday homes as landlords, afraid of all these new draconian measures, pull their properties away.
You really couldn’t make it up.
The Spanish government single-handedly has managed the double whammy feat of spreading contagion of high prices from off-plan over to resales, and also from long-term rentals over to short-term rentals (holiday homes). You have to admit this takes a degree of skill. And to boot, they lay the blame of price spikes on tourists and foreigners at large!
Artificially stifling supply is seldom a good idea, as it distorts market prices, leading to high prices. It’s not magic, it's economics; the law of demand and supply at work. One day, all these misguided housing policies that the Spanish government is now adopting will be found in economic textbooks as a case study of what should NOT be done by a government. It’s not a matter of ideology, it’s a matter of sound management.
In conclusion, both property and rental prices will continue to rise in Spain over the next years for all the reasons collated in our idealista article.
At LNA, our friendly team can assist you in buying (or selling) your property anywhere in Spain. We can also get you any residence visa in Spain. Give us a call!
At Larrain Nesbitt Abogados (LNA) we have over 22 years of experience specialising in property conveyance and taxation all over Spain. We also assist clients with immigration & residency visas, and inheritance procedures (probate). You can contact us by e-mail at info@larrainnesbitt.com, by telephone on our UK line (+44) 0754 3838 218, or Spanish line (+34) 952 19 22 88, or by completing our contact form.
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