He mortgage effort of Spaniards to purchase housing is approaching 2006-2007 levels, after the rise in residential prices by just over 10% year-on-year in the second quarter. Although experts rule out that the market is approaching a generalized ‘bubble’ scenario, they warn of “regional and specific” risk.
This is stated by ‘XXII edition of the Valuation Observatory’ of the Spanish Association of Value Analysis (AEV) collected by Europa Press. In it, 66% of panelists from appraisal companies and 75% of external panelists point out that the magnitude of these increases responds to solvent demand, a more prudent buyer profile than before 2008 and much stricter financing conditions.
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Stressed areas in the Balearic Islands and Canary Islands
The report warns of localized tensions, although mortgage debt levels are still far from those of the previous crisis.
In the Balearic Islands and the Canary Islands, this tension is due to foreign demand that already exceeds 30% of operations. The pressure on prices is notable and in some segments speculative dynamics linked to tourist rentals and investment for profitability.
These situations, although they are still a minority, reflect that the risk of a bubble can “be regional and specific, rather than generalized throughout the country.”
“The structural problems of the Spanish real estate market persist and are getting worse in certain territories,” said the general secretary of the AEV, Jorge Dolç, who has demanded a medium and long-term strategy that combines financing, land and affordable housing to balance the market.
Residential rent rises and supply decreases
Residential rental continues to be the great focus of tension. Rental income increased between 9% and 15% year-on-year in the second quarter, with a national average of 9%. The difference between this period and previous stages is that the pressure is no longer limited to large capitals, but extends to medium-sized cities and areas where purchase demand cannot materialize due to lack of access to financing.
All panelists agree that rents will continue to grow in the coming quarters. Only some anticipate some moderation in the pace, but none foresee a significant correction in the short term.
The main causes are the lack of structural supply, the transfer of demand from purchasing to renting and the pressure of tourist rentals, which competes with habitual residence. Almost all experts point out that one of the key solutions could be increasing the available supply, and the majority reject generalized regulation. However, a small group supports mixed measures such as short-term regulations combined with limits on tourist rentals.
Moderation in buying and selling
As for sales, they showed strong dynamism in 2024 and began the first quarter of the year with 177,000 operations, a pace that the majority of experts (77%) believe can be maintained during 2025, supported by the relaxation of monetary policy, demographic growth and the dynamism of international demand. However, some warn that the lack of supply and the financial exhaustion of certain households could cause a moderation in the second half of the year.
On the contrary, 85% of the panelists consider that foreign demand will continue to put upward pressure on prices in specific local markets, which will make access difficult for the resident population, after having represented 18.5% of total operations in 2024, with a special impact on the Balearic Islands, the Canary Islands, Alicante, Malaga and Madrid.
More public aid for young people
The report reveals that four out of every ten purchase transactions are closed without mortgage financing, a very high proportion compared to previous decades, which for the majority of panelists (77%) especially affects first-time buyers, who lack prior savings and depend on mortgages.
To facilitate access to housing, 62% of the internal panelists consider it necessary to reinforce public aid, through guarantees, subsidies or specific mortgages for young people, an opinion that divides the external panelists, equally although the report specifies that among the external panelists, which reflects a lack of clear consensus on the effectiveness of these measures.
92% of the panelists consider that the banking system is prepared to sustain a new building cycle, with more than 120,000 mortgages formalized quarterly and without liquidity restrictions as in the past, but 77% defend designing a specific credit policy that supports both medium and small developers as well as first-time buyers.
The report has recorded an increase in development activity, with 20.3% more buildings started and 13.1% more completed, along with a rebound in developer credit (+3.5%). Despite this, only 23% of the panelists consider that these data allow us to speak of a sustained recovery, compared to 77% who reject it as premature.
Bet on soil growth
61% of experts consider that policy in this area should prioritize access over purely market formulas, especially in large cities where prices have reached very high levels.
The report specifies that only 8% of the panelists consider that credit is the critical factor for unlocking, compared to 92% who reject it and point to structural factors such as land, costs and the lack of public housing.
Factors that add to the situation in which cement consumption finds itself, which remains stagnant due to construction costs—accumulating an increase of 40% since 2019—and the lack of qualified labor that slows down the growth momentum.