Rising housing prices and difficulties in accessing purchase and rental options raise certain concerns about the risk of a new “bubble” in the real estate market. However, this scenario has not only been rejected by the Bank of Spain, but also refuted by the Appraisers’ Association, various real estate experts, and economists.
Study: no nationwide “bubble,” but local tensions are possible
Their study asserts that Spain is not on the verge of a “bubble” like the one in 2008, although it notes that there are indeed tense situations in some specific parts of the country. The document indicates that in the second quarter of 2025 housing prices rose by just over 10% year-on-year, and mortgage expenses for home purchases are already approaching 2006–2007 levels.
Why price growth alone doesn’t make a “bubble”
Despite growth rates exceeding those of previous years and rising mortgage costs, 66% of appraisal companies and 75% of external experts agree that this is due to solvent demand, a more cautious buyer profile compared to the pre-2008 period, and much stricter financing conditions. However, they acknowledge that price pressure is particularly visible on the coasts, where demand from foreign buyers is high.
Speculative factors and regional specifics
They also note speculative dynamics linked to tourist rentals and profit-seeking investments. These situations show that the risk of a “bubble” may be regional and specific, but not nationwide.
Rentals: record levels and short-term outlook
Another conclusion is that pressure in the rental market will persist in the short term. According to the Idealista portal, the average rent in September was €14.5/m² per month (+10.9% year-on-year). In the last quarter, the overall market average fell by 1.3%, although record values were recorded in several provincial capitals.
The data show that rent increases occurred in all autonomous communities as well as in all provincial capitals, where prices are higher than a year ago. Among them, the following stand out:
- Madrid – 11.2%;
- Seville – 9.8%;
- Alicante – 7.5%;
- Barcelona – 6.9%;
- Palma – 6.2%.
These cities show the highest figures ever recorded.
Forecast for rental rate dynamics
All experts state that rents will continue to rise in the coming quarters. No one expects a significant correction in the short term, although some foresee a certain slowdown in the current growth rate. Overall, they forecast annual rent growth of 9–15% due to the supply shortage and the shift in demand from buying to renting.
Structural reasons behind the current situation
Among the most frequently cited reasons explaining this situation are the structural supply deficit, the shift in demand from buying to renting, and pressure from tourist rentals, which compete with permanent housing. In addition, pressure in the rental market is no longer limited to major capitals; it is now spreading to medium-sized cities and areas where purchase demand cannot be realized due to lack of access to financing.
Factors putting pressure on sale prices
The study also confirms that there are a number of factors that will continue to put pressure on prices of homes for sale. For example, investors, foreign buyers, and individuals with strong financial capacity are able to purchase property without mortgage financing, giving them a competitive advantage over young people or middle-income families.
Construction: recovery still premature
On the other hand, the growth in new construction projects remains insufficient to meet current demand. Only 23% of surveyed real estate professionals agree that it is possible to speak of a stable recovery in construction activity, while 77% consider this premature. The fact is that the sector suffers from high construction costs, which have risen by 40% since 2019, and a shortage of qualified labor.
Regional hotspots
Another source of housing tension is strong foreign demand in regions such as the Balearic and Canary Islands, the provinces of Alicante and Málaga, as well as the Autonomous Community of Madrid.
What could improve access to housing
As for possible solutions that would help improve access to housing, virtually all experts note that the key to solving the problem is to increase affordable supply through various formulas. In particular, this includes the construction of new rental housing, mobilization of vacant housing stock, strengthening legal certainty for landlords, and encouraging public-private partnerships. Most experts reject blanket regulation, although some advocate mixed measures – such as short-term regulations or restrictions on tourist rentals.
The role of credit and other structural factors
Up to 92% of experts rule out credit as a critical factor for unlocking access to housing and point to other structural factors – such as land, construction costs, and the shortage of public housing, which they consider the cornerstone of housing policy.
The need for targeted support
Most appraisers consider it necessary to strengthen government support through guarantees, subsidies, or special mortgages for young people. For their part, experts call for the development of a special credit policy that will support both medium- and small-scale developers and first-time homebuyers.
