The Spanish property market is producing some paradoxical numbers at the moment, figures that show both soaring prices and falling sales overall. What’s the cause of this according to the experts?
The price of second-hand homes in Spain rose by 16.9 percent year-on-year in May, reaching €2,795 m/2, according to the latest Idealista property price index.
Yet house purchases have fallen compared with last year, with 4,713 fewer total transactions between January and March than in the same period of 2025, representing a 2.6 percent decline.
However, this dip comes as other key market indicators have reached high levels. The number of mortgages signed, for example, was the highest in the last 15 years (131,554) for a first quarter.
All regions are experiencing higher prices compared to the previous year.
Murcia (24.6 percent) leads the rises, followed by Cantabria (19 percent), Andalusia (18.3%) and Asturias (17.1 percent).
Below the national average are the increases in Castile-La Mancha (15.1 percent), Aragón (14.8 percent), Valencia (14.7 percent), Catalonia (14.2 percent), Madrid (11.9 percent) and the Basque Country (11.5 percent).
Increases of less than 10 percent were recorded in Castile and León (9.9 percent), Navarre (9.8 percent), Extremadura (9.6 percent), Galicia (9.5 percent) and La Rioja (9.2 percent).
The Balearic Islands (7.8 percent) and the Canary Islands (8 percent), meanwhile, recorded the smallest increases, but are both regions considered two of the hardest hit by Spain’s post-pandemic property price surge.
So what’s going on here — why are prices still rising so sharply when demand is down overall?
“It’s a question that often comes up, but it’s actually a normal feature of a changing market cycle,” Spanish property expert Mark Stücklin, who runs the long-established website Spanish Property Insight, told The Local.
“It looks as though we’re entering a new phase, with sales declining for the first time since mid-2023. Sales were broadly flat in Q4 last year and have now turned negative in Q1 2026, suggesting the market may be moving into a period of contraction after seven consecutive quarters of growth.
“That doesn’t mean prices will immediately follow,” Stücklin stressed.
“Prices typically lag changes in sales activity, and you often see cycles where sales fall but prices never do. So while the direction of travel in sales is now clearly downwards, it’s too early to conclude that prices have peaked.”
So what’s Stücklin’s property forecast for what remains of 2026?
“My expectation for the rest of the year is further weakness in sales growth and a gradual cooling of price increases.
“However, I don’t expect nominal prices to fall. Unlike previous downturns, there is no obvious bubble and no significant oversupply. The more likely scenario is that buyers are increasingly hitting affordability limits and becoming less willing or able to absorb further price increases.
For Pau A. Montserrat, Professor of Financial Economics at the University of the Balearic Islands (UIB), the decline in property sales coinciding with a rise in mortgages is far from an anomaly either.
He told Spanish daily El País that both trends are consistent because they reflect a change in the profile of the homebuyer: “A significant portion of demand came from purchases made without the need for financing, such as those by many non-residents, and that segment has been scaling back its activity for some time”.
“The fact that professionals or buyers with greater financial capacity are pulling back as they perceive a possible overheating of the property market may be an early sign of a change in the cycle,” he adds.
