BBVA Research predicts further price increases in housing. According to its latest real estate report, the residential market is expected to experience a slowdown in sales, an increase in new builds, and further price increases in the coming months.
The financial institution's research department expects housing demand to remain strong in the coming months, driven by job creation, rising wages, relatively low interest rates and the formation of new households by both Spaniards and migrants. This is further bolstered by foreigners purchasing second homes.
Regarding supply, BBVA Research also anticipates an improvement. Specifically, it explains that "new-build construction will grow by 10% in 2025 and 12% in 2026". However, it warns that this growth rate will be "insufficient to meet the accumulated unmet demand between 2021 and 2025 (625,000 households), with a deficit of 134,000 units in the last 12 months alone. The homes completed between 2021 and 2025 will only have served 45% of the households created. At the current construction rate, this gap will take a long time to close," it warns.
As a consequence of the ongoing market imbalance, the upward trend in housing prices will continue. According to their calculations, property prices are to increase by an average of 10% this year and by an additional 7% next year.
Regarding sales, the bank's research department predicts a slowdown in transactions, as official statistics are already beginning to show.
According to notaries, 38,239 property transactions were signed across Spain in August, a 1.3% year-on-year decrease. This is the lowest figure in the last two years, the second consecutive decline and the third in the past four months.
Home sales have slowed down since last February, hampered by the shortage of new and used properties and high prices, which could be driving some demand out of the market.
In this context, BBVA Research explains that "the lack of affordable supply may limit sales growth, even though various factors will continue to support demand growth"; and expects that, on average, transactions will grow by 1.8% annually in 2025 and stagnate in 2026, when it forecasts a slight drop of 0.3%.
Factors that hinder housing construction
The latest BBVA Research real estate report not only reviews forecasts for the end of this year and 2026, but also focuses on the multiple factors that are hindering new housing production.
- Regulatory uncertainty. The research department believes that "the most damaging aspects of the reforms must be reversed," affecting the rental market, and that "legal proceedings in cases of breach of contract should be sped up." In other words, it criticises the Housing Law and calls for accelerating the eviction of squatters.
- Shortage of developable land. "In Spain, we're still awaiting the construction of homes equivalent to 26% of the current housing stock," comments BBVA Research. In their opinion, accelerating land development timelines is a key priority.
- Reduced public budget. The social housing budget is at low levels, according to the bank's economists. Although the research department views the budget allocated to the new 2026-2030 Housing Plan positively, it notes that "the social housing budget is low".
- Labour shortage. "The construction sector has seen the greatest increase in unfilled vacancies. Between 2016 and 2024, the volume has quadrupled," the observatory explains. This is also driving up labour costs in the sector, which are at record highs and putting pressure on developers' profit margins. Therefore, "the sector faces the challenge of generational change due to the ageing workforce. Immigration, training and the industrialisation of processes are part of the solution."
- Reduced productivity. In addition to the lack of professionals and labour costs, the research department states that productivity in the sector "is 25.4% below the average productivity of the economy."
- Rising material costs. Another obstacle to new housing development is the significant increase in construction material prices following the pandemic. "Thirty-three materials are rising faster than the consumer price index (CPI)," the text states.
- Tourist accommodation. According to BBVA, "the increase in tourist rental properties reduces the supply of permanent rental housing". They also note that there are currently around 400,000 tourist properties throughout Spain.
- Financing. Finally, he notes that "bank financing has decreased by about 80% compared to the peak reached in 2008".
The research department also sees a need to improve the profitability of construction companies, especially SMEs, as this can help increase the housing supply. Above all, it calls for political and institutional consensus to undertake reforms that will revitalise the sector and greater coordination among public administrations, since a lack of agreement will hinder the achievement of the overall objectives.