House prices in Spain - Figures & Tips

The Spanish housing market has always been an interesting mix of factors. This is because prices not only depend on supply and demand, but are also heavily influenced by tourism, local regulations and the economic situation of the region. Pedro tells you more about how prices come about in Spain!

What determines house prices in Spain?

Over the years, foreign buyers and investors have strongly influenced the market. On the one hand, the sun, sea and relaxed lifestyle appealing to many have caused foreign demand to drive up prices, especially in popular areas. But also "nudging", or touting of properties by (foreign) specialists has a strong pull effect resulting in higher prices. Think of influencers who nice returns promise, or your own asset manager presenting property in Spain as an investment option.

As a counterbalance, the Spanish economy does cause fluctuations in house prices. During economic peaks and the recovery after the financial crisis, Pedro saw sharp price increases, while in less stable periods the market often cools down, with many vacant or unfinished properties and in which prices drop rapido. In this article, Pedro discusses how these factors affect price differences between regions, which factors further influence prices and what the future outlook is for the Spanish housing market.

House prices in Spain are always subjective. For instance, modern new construction (often aimed at foreigners) is always more expensive than typical classic Spanish houses (small flats or fincas with a low level of quality).

House prices in Spain by region

In Spain, house prices vary considerably by region. This depends mainly on the location, tourist attraction and the property supply available. Here is an overview of the most popular and most expensive regions compared to the cheaper alternatives:

• The most expensive regions are particularly large cities such as Madrid and Barcelona and islands such as the Balearic Islands (Ibiza & Mallorca) & the Canary Islands. These are known for their high house prices. On average, prices here are above €3,000 per square metre and can amount to as much as €5,000 or more per m² in the most sought-after locations. These areas often attract expats and international buyers looking to invest in luxury or holiday homes, further driving up prices. Andalusia is a bit of an area with two faces. Indeed, the coast (costa del sol) and cities like Marbella, Malaga and Seville are very pricey. But the inland is very affordable and typically Spanish.
• Affordable regions are, for example Extremadura and the vast northern regions around and above Madrid, such as Aragon, Asturias, Castile (and Leon & la Mancha) & Galicia prices are considerably lower, often between €1,200 and €1,500 per square metre. These places mainly attract people looking for a quieter, affordable life in Spain, away from mass tourism. This region is often more popular with Spaniards themselves. You can still find good deals here, especially in areas that are not directly on the coast.

Depending on where you look, house prices in Spain can vary widely. Luxury is mostly found in the big cities and costas, but affordable rural living is also possible, although it certainly has its drawbacks.

Overview of average prices by region

* These prices are based on available offers, aimed at foreign buyers. It is not a representation of all real estate in Spain!
Source = spainhouses.net

Factors affecting Spanish house prices

Tourism and expats: house prices in Spain are strongly influenced by the attraction of tourists and expats. Especially in coastal areas and the islands, the demand for (second) homes drives up prices. Popular regions such as Costa del Sol and Costa Blanca are perfect examples of this. The large number of tourists makes it attractive for investors to buy and rent holiday homes, which in turn drives up prices.

Regulation and taxation: local and national rules in Spain also play a role. Some regions have strict rules for short rentals to tourists, for example, as in Barcelona. This impacts property values, as owners can earn less from rentals. In addition, taxes, such as transfer tax and property taxes, affect the purchase price and the return on Spanish property.

Future expectations and economic situation

The Spanish property market, like everywhere else, has peaks and troughs. As in recent years, stable market growth is expected in 2024 and 2025. Prices in the really popular areas are expected to continue to rise the hardest. The degree of increase or decrease depends heavily on the general economic outlook, inflation and demand from abroad, such as from the Netherlands or Belgium.

So realise very well that you, like other foreign buyers, greatly influence house prices in Spain. Both adversely and positively.

What does this mean for a mortgage in Spain?

The higher the house prices in Spain, the more you have to finance. Often prices in tourist areas are too high to finance purely from surplus value in the Netherlands or Belgium finance.
There is then an additional mortgage in Spain needed. Whether you can afford that, then, remains to be seen. Fortunately, Pedro can work that out with you, via our mortgage indication Spain!

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Tips for buyers in Spain: how to make a smart property choice?

Do you want to start buying a property in Spain after reading this article? Whether you're going for a holiday home, an investment or a permanent move, it's smart to take a few things into account. Here are some tips from Pedro for you:

1. Do thorough research on regions - Decide what type of region you are looking in. For a holiday home, look at popular areas such as the Costa del Sol, but for an affordable option, consider regions such as Murcia or parts of Andalusia. Here you still get the Spanish sun and atmosphere, but at a fraction of the price compared to Barcelona or Ibiza.
2. Keep in mind future expectations - Do you particularly want to buy an investment property? Then check what the market expectations are in the region. Look at factors such as tourist appeal, planned infrastructure projects (such as new airports or highways) and the influence of expats. This can help you estimate how the value of your property will develop.
3. Take into account additional costs - In addition to the purchase price, you should also think about costs and taxes, such as transfer tax, notary fees, registration fees and annual property taxes. These costs can add up to a good percentage of the purchase price and maintenance costs, so keep this in mind. You will find a complete overview of costs here.
4. Engage local experts - the Spanish property market works differently to the Netherlands or Belgium, with many regulations differing by region. It is therefore wise to use a local estate agent who is familiar with local regulations. Or ask via holapedro legal procurement assistance to, so professionals guide you through the process.
5. Limit risks in rental plans - if you plan to rent out your Spanish property, find out about the specific rental rules in your region. Especially in tourist areas, there are sometimes strict rules for renting to tourists, including permits and tax regulations.

There are plenty of stories where Dutch or Belgian buyers have been duped into buying and lost a lot of money. Make sure you don't become one of them!

What can you expect from Spanish house prices?

The Spanish housing market remains a dynamic place, with large differences by region and price factors varying widely. The region and the difference between urban/coastal and rural is currently the most important house price factor for those dreaming of property in Spain. There will be constant demand in the future from both domestic buyers and foreign investors. But be well aware that no one can predict the (economic) future or crisis, least of all economists.

In short, whether you are looking for a holiday home, investment or new life in Spain, you will find a property in Spain for every budget. Not always in your preferred region, but if you are willing to make concessions, you will definitely succeed! With the right preparation, a clear understanding of the market and possible help from experts through holapedro, you can make a smart choice in the Spanish housing market.

Getting started with your home purchase in Spain?

Start with Pedro's mortgage indication to see if you have enough financial room to afford the house prices in Spain! Or let Pedro help you with your questions regarding your Spanish purchase. Better asked than never known.

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