Article written by Francesco Iñareta, idealista spokesperson.
By the end of 2025, Spain’s housing situation can be described in only one way: a national emergency. The shortage of supply has become structural, yet the public debate continues to fixate on price controls and other measures driven by ideological positions rather than practical outcomes. This framework has dominated policy for years, and it is now imperative to move beyond it and adopt a new approach grounded in consensus, expert insight and, above all, data-driven decision-making.
Regrettably, the damage already done will be challenging to reverse. Worse still, the measures proposed in recent weeks appear to be pushing the market further in the wrong direction, deepening existing imbalances rather than correcting them.
In parallel with growing political confrontation, housing policy has entered a kind of post-truth era. Institutions themselves are increasingly questioning the credibility of data and statistics that should serve to bring transparency and clarity to the market, particularly when that data exposes the ineffectiveness, or even the harmful consequences, of the policies implemented to date.
We are facing a period of profound legislative uncertainty. The absence of even minimal political agreement will make it virtually impossible to pass or amend any legislation capable of improving housing affordability. As we move into 2026, the housing market is set to continue along the same trajectory as in recent years: prices will keep rising, both in the sales and rental markets, while supply will continue to contract across both segments.
The rental market
The rental crisis is now bordering on catastrophe. We are living with the consequences of years of legislation that have consistently overprotected tenants with existing contracts, while excluding those actively seeking housing. Even tenants who currently feel secure will eventually face the same reality when their contracts end, and they are forced back into an increasingly constrained market.
The growing imbalance between landlords and tenants has led to thousands of properties being withdrawn from the rental market, adding to the number of homes sold. As a result, the problem is no longer limited to high prices; in many areas, it has become practically impossible to rent a home at all, even for those who can afford the rent.
Paradoxically, the current political deadlock has offered some temporary relief to the rental market by preventing the approval of further measures that would have made renting even more difficult, particularly by restricting access to housing even further. However, this pause reflects parliamentary arithmetic rather than any genuine shift in the diagnosis of the housing crisis or the solutions required. Consequently, there remains a real risk that some of these proposals may eventually be implemented.
In 2026, prices are likely to ease slightly in areas where they have plateaued as a result of regulatory intervention, while continuing to rise in markets where no such measures have been applied. The cost of maintaining price controls, however, will be borne by those seeking housing, as supply continues to shrink and access conditions grow ever more restrictive. What emerges is a divide among tenants themselves: those who benefit from coercive measures imposed on landlords, and those who are excluded from the market as a direct consequence of those same policies.
This is the true challenge facing Spain’s rental market today. Competition among households for the few available homes is intense. On average, more than 50 prospective tenants compete for each idealista listing, and at first glance, price is not the primary obstacle. Instead, applicants are drawn into a kind of “casting” process each time they attempt to secure a rental, in which only one household is ultimately selected. The remainder must continue searching and repeatedly re-entering selection rounds, often finding that an even stronger candidate has emerged.
Families with children, people over 65, single-parent households and individuals reliant on a single income are systematically disadvantaged and far less likely to be chosen. Faced with a flood of applications, landlords inevitably prioritise those offering the greatest perceived security of payment – often applicants whose financial profiles far exceed what the rent itself would require. This dynamic has led to a growing “elitisation” of the rental market.
As supply has diminished and competition has intensified, increasingly demanding financial criteria are imposed, excluding many people who, before the introduction of these regulatory imbalances, had little difficulty finding a rental home. In effect, policies intended to protect vulnerable groups first pushed the most vulnerable out of the market, then those at risk of becoming vulnerable, culminating in a system in which large segments of society are now systematically excluded.
The property market
House prices are set to close the year with a year-on-year increase of more than 15%, with particularly strong growth in Madrid and Valencia, where price rises will exceed the national average. In Barcelona, by contrast, the city’s unique market dynamics mean that price growth is likely to remain in single digits, as the reduction in supply has been partially offset by homes shifting from the rental market into sales.
Demand is now overwhelmingly concentrated on the existing housing stock, which has long been insufficient to sustain it. With new construction running at around 100,000 homes per year, a simple review of transaction data shows that the majority of sales involve properties previously used as rentals. This dynamic, however, is not sustainable. As the stock of rental housing continues to shrink, maintaining current sales volumes will become increasingly difficult.
If the market is to regain balance, we need to see cranes return to the skylines of many Spanish cities. This requires an end to the criminalisation of construction, the populist rhetoric surrounding development, and the political short-sightedness that continues to block the activation of key mechanisms – such as reform of the Land Law – that could accelerate the delivery of new housing. At the same time, the acute shortage of skilled labour in the construction sector cannot be ignored. Addressing it will require bold, coordinated policies to attract, train and retain the workforce needed to deliver the homes the country so urgently requires.
Housing demand remains extremely strong, but the record prices being set month after month are forcing an increasing number of families to withdraw from the market. While mortgage financing is relatively accessible, it requires levels of savings that are beyond the reach of many households. Even so, the gap between supply and demand is now so wide that the exit of these segments of demand is unlikely to trigger price falls, though it may help to moderate the pace of future increases.
At the same time, house price growth continues to far outstrip growth in household incomes, pushing affordability to ever more strained levels. In the country’s major markets, the financial effort required to purchase a home already exceeds the thresholds recommended by financial experts, underscoring the growing disconnect between prices and purchasing power.
In this context, house price growth is far outpacing growth in household incomes, meaning that the financial effort required to buy a home is increasing steadily and, in the major markets, already exceeds the limits recommended by financial experts.
Property transactions
Home sales are at record levels, with well over 700,000 transactions completed. However, a slowdown has emerged in recent months, likely reflecting the impact of elevated prices and a sharp reduction in available housing. While it is unlikely that these growth rates will be sustained in the coming quarters, sales may stabilise around current levels, supported by demand for long-term, seasonal and holiday homes – trends that are already having a profound impact on those segments of the market.
Mortgages
Unlike in 2024, mortgage lending has been on a steady downward trend, shifting from the euphoria of the first half of the year to more moderate growth in the second. The overall environment has remained favourable, supported by low interest rates and high employment levels, which have sustained strong demand and encouraged banks to lend. Intense competition within the banking sector has led to offers well below the cost of funding, with fixed-rate mortgages available at under 2% and mixed-rate products below 1.5% during their initial fixed periods. In this context, variable-rate mortgages have all but disappeared from the market, while mortgage transfers have also fallen sharply following the exceptionally high levels of refinancing and bank switching seen in 2023 and early 2024.
Looking ahead, we expect the mortgage market to remain broadly stable throughout 2026. Banks are likely to continue offering highly competitive products, albeit at slightly less attractive levels than those seen recently. Close attention will need to be paid to the evolution of house prices, overall economic activity and, in particular, the unemployment rate, as these are the main factors that could cloud what should otherwise be another positive year for mortgage lending – albeit less buoyant than 2025.
Overall, 2026 appears to be a year of continuity, marked by rising prices, sustained pressure on demand, chronically scarce supply, and a public narrative that focuses less on identifying solutions than on apportioning blame.