Housing in Spain is more expensive than it has been in nearly two decades. New figures show the average price of a home has reached €2,093.50 per square metre in the second quarter of 2025. That is the highest level since 2008 and marks an annual rise of 10.4%.

New Homes vs. Older Properties

The difference between new and existing housing is clear. New homes, defined as those less than five years old, now average €2,440 per square metre. Older homes are slightly cheaper at €2,083 per square metre, but both categories have climbed sharply over the past year.

Regional Gaps Continue to Widen

Prices vary greatly depending on location.

• Madrid and the Balearic Islands are at the top end, where new homes can cost more than €4,000 per square metre.
• Barcelona and the Basque Country also remain expensive, with prices well above the national average.
• On the other hand, areas such as Castilla-La Mancha or provinces like Ciudad Real remain far more affordable, in some cases under €1,000 per square metre.

This divide is creating a two-speed housing market, with strong demand in cities and coastal areas but slower growth inland.

Why Prices Are Rising

Several factors are behind the increase:

• Housing shortage. Spain is estimated to be short of 600,000 to 765,000 homes. Construction has not kept pace with demand.
• Foreign demand. International buyers continue to invest, particularly along the Mediterranean coast and in island regions.
• Rising costs. Inflation and higher building costs make new housing more expensive, which pushes up the wider market.
• Mortgage access. While interest rates remain a concern, some buyers are moving quickly in expectation of further rises.

The Growing Gap Between Incomes and Housing Costs

While house prices have climbed more than 10% nationally in the past year, wages have not kept up. The minimum wage in Spain for 2025 is €1,184 gross per month (14 payments), adding up to about €16,576 a year, one of the lowest in Western Europe. Even the average gross salary, which sits around €28,000–€32,000 a year, is rising at a much slower pace than housing costs. In Andalucía, for example, property prices jumped 12.1% in 2024, while wages increased by only about 3%.

This widening gap means homes are becoming harder to afford for many households. In places like Málaga, property prices rose three times faster than wages, leaving those on average or minimum salaries struggling to buy. For younger people and families without savings or outside help, the dream of homeownership is slipping further out of reach. Without stronger wage growth or major increases in housing supply, affordability will remain one of the biggest challenges in Spain’s property market.

How Spain Compares to Europe

Spanish property prices are rising faster than the EU average. In early 2025, annual growth was about 12%, compared to just 5–6% across the European Union. This makes Spain one of the hottest property markets in Europe right now.

What’s Next?

Forecasts suggest the upward trend will continue. Analysts expect prices to climb by another 9% between now and 2026. Without more supply, particularly affordable housing, many families may find it increasingly difficult to buy. Renting is also becoming more expensive, as higher purchase costs filter through to the rental market.

The Bigger Picture

For buyers, the message is clear: waiting could mean paying more. For policymakers, the challenge is how to increase supply and keep housing affordable. Unless construction ramps up and demand eases, Spain’s housing market looks set to stay on a steady upward path.

Main image: pexels-stefan-mitev