Spain’s housing market continues to soar. Home prices have risen 7.5% when compared with the same period in 2024. And, many people are wondering if there are any commonalities with the real estate bubble of 2008.

Unlike the 2008 property bubble, real estate growth is recent years is driven by real, measurable economic and demographic factors and not speculation and risky lending practices. The reasons behind the current surge include robust employment, a stable economy, a strong foreign demand, and an imbalance between demand and supply. The reality is that demand has remained strong, and there is a notable lack of product in key areas. This imbalance between supply and demand is especially visible in cities like Madrid, Seville, and coastal areas with strong infrastructure and services, and especially in hotspots along the Costa del Sol and Costa Blanca. The most competitive real estate markets combine these 2 demands – coastal cities that offer excellent infrastructure and services (Malaga, Palma, San Sebastian, Barcelona and Valencia).

Morbi vitae purus dictum, ultrices tellus in, gravida lectus.

Today’s lending landscape looks very different from that of the last crisis. Mortgage approval is tighter, down payment percentage is higher, and most buyers are more financially secure. The average household is now dedicating around 35% of their income to their first mortgage payment, and this figure is close to what experts consider “reasonable.” In contrast, during the 2008 crash, loan approvals were far more lenient, and many buyers were over-leveraged.

What adds a large bolster to the 2025 real estate market in Spain is the large number of foreign cash buyers. Many international investors and retirees purchase properties without mortgages, especially in coastal areas, and this helps drive market momentum. In addition, mortgage rates are starting to decrease, and this adds impetus to an already strong market and a signal that prices could continue their climb through the rest of 2025.

Morbi vitae purus dictum, ultrices tellus in, gravida lectus.

Is 2025 really a good time to buy property in Spain? For long-term buyers, particularly in regions with solid rental potential and/or infrastructure investment, all indication is that now is an excellent time to invest. Cities like Madrid, Alicante, Valencia, and Malaga are likely to see continued price growth, driven by high demand and limited areas for new supply. Meanwhile, smaller coastal towns in the Costa Blanca and Costa del Sol with upcoming projects for infrastructure improvements are seen smart alternatives.

While some analysts expect price growth to slow later this year (although the same was said in 2021, 2022, 2023, and 2024 citing covid and increasing loan rates), there’s no sign of a market correction. The reality is that Spain is seen to offer ‘an idyllic lifestyle’ by many citizens in Europe, and it’s not likely that this perception will change any time soon, even with the occasional political curveball. With no widespread overbuilding and tighter lending controls in place, the Spanish housing market today is more balanced than it was in the early 2000s. In short: prices are high, but the foundations are solid.

Are you looking to invest or relocate in Spain? What do you think of the real estate prices in Spain compared with other countries in Europe?