The Spanish housing market reached new heights in November, with property prices recording a 10.7% year-on-year increase. The national average now stands at €2,244 per square meter, the highest ever recorded. This increase includes a 3.1% rise over the past three months and a 1.6% increase in November alone. These consistent increases highlight the ongoing imbalance between supply and demand in the housing market.

Comparing Regional Housing Price Trends

All regions experienced higher housing prices compared to November 2023, with seven communities reporting double-digit growth. The Community of Madrid led the way with a 17.1% increase, followed by the Balearic Islands (15.7%), Murcia (15.5%), the Canary Islands (15.3%), and the Valencian Community (15%). Andalucía and Cantabria also saw significant growth, both at 10.7%.

Regions with smaller increases included La Rioja (2.9%), Castilla y León (3.6%), and Extremadura (3.8%). Baleares remains the most expensive region for housing, averaging €4,686/m², while Castilla-La Mancha is the most affordable at €946/m².

Capital Cities: Rising Costs Everywhere

All Spanish provincial capitals saw increases in housing prices over the past year. Valencia topped the list with a staggering 22.9% annual rise, followed by Málaga (21.7%) and Madrid (20.4%). On the lower end, Melilla (1.3%) and Palencia (1.7%) reported the smallest gains. San Sebastián remains the most expensive capital at €5,669/m², while Zamora is the cheapest at €1,165/m².

Driving Forces Behind the Price Hike

Experts attribute the continuous price hikes to limited housing supply and sustained high demand. According to Fotocasa, the housing sector faces a production shortfall, with an estimated 240,000 new homes needed annually to meet demand, yet only 100,000 are being built. Additional factors include demographic shifts, increasing material costs, and favorable mortgage conditions following interest rate cuts.

The National Institute of Statistics (INE) reported an 8.1% year-on-year price increase for the third quarter, marking the steepest rise in over two years. Second-hand homes rose by 7.9%, while new builds increased by 9.8%. However, the growth rate for new homes dipped below 10% for the first time since late 2023.

Fewer Foreclosures Despite Rising Prices

Despite escalating property costs in Spain, the number of mortgage foreclosures continues to decline. The third quarter of 2024 saw a 1.1% year-on-year drop in foreclosures on primary residences, the lowest figure since 2019. Foreclosures fell by 23.8% compared to the previous quarter, marking ten consecutive quarters of decline.

What Lies Ahead?

Housing prices in Spain show no signs of slowing, with experts predicting further increases of around 7% in 2025. Addressing the supply shortage remains critical to balancing the market and easing upward pressure on prices. For now, buyers and renters will face a challenging environment as demand continues to outpace supply.