The housing market in Spain is entering a new phase, less intense, more normalized, much less expansive. In short, a stage in which fewer houses will be bought and sold and the pace of price increases will slow down, especially in the most suffocated cities. On the operations side, the boom that began in 2020 with the pandemic is over, a super critical period in which transactions were surpassed year after year. The slowdown in sales was already visible at the end of last year with data from the General Council of Notaries. In the first two months the trend has been confirmed: they fell 11.4% year-on-year in January and 7.7% in February – they decreased in 14 regions and only grew in three communities. It is early to talk about a change of cycle to use. «The Spanish residential market seems to be entering a different phase, less expansive in the number of operations, but without a clear correction in prices. It would not be a change in cycle like the one we saw after 2007, but a transition conditioned by a bottleneck in housing construction,» says Pedro Álvarez Ondina, economist in the Spanish Economy department at CaixaBank Research. Raymond Torres, director of Economic Situation at Funcas, believes that “the slowdown in transactions that we are seeing prefigures a change of cycle in the housing market.” The economist attributes this, among other factors, to the “exhaustion of solvent demand.” And it puts an uncomfortable reality on the table: part of the demand that a year ago had the capacity to buy a house and did not do so, today can no longer, has been left out, mainly due to the high amount of savings required to qualify for financing. «In previous years there was still a significant pent-up demand and households had a savings cushion. Now it is concentrated in some groups, but it is not widespread.» Real estate agencies, which monitor the market daily, report this slower pace of sales, which they already predicted in September 2025. «It takes longer than a year ago to close a transaction, the time needed to sell has increased between 20% and 30%, and the adjustment margin between the price of exit and closing has also grown,” says José María Alfaro, president of the National Federation of Real Estate Associations. BBVA Research predicts a drop in operations of between 1.5% and 2% for the year as a whole. A significant change if you look at the last few years, although not radical. “Although sales slow down, the level is still high,” says Félix Lores, an economist at the bank’s research service, who estimates that there will still be more than 700,000 transactions in 2026. Solvent demand is transforming: it has an increasingly higher socioeconomic level. “Now buying requires more prior savings, higher income, more job stability and more dependence on financing, while many homes that could buy a few years ago, but that today do not reach current prices are left out,” says María Matos, Director of Studies and spokesperson for Fotocasa. And he says: “We will get out of the real estate boom that lasted five years.” We must also take into account that the mortgage market is beginning to harden and become more expensive after a period of strong banking competition and the imminent change in European monetary policy. The 12-month Euribor has experienced a significant rebound during the first months of the year, reversing the downward trend at the end of 2025. “If mortgage conditions tighten, it is logical that a part of the demand will lose purchasing capacity and be expelled from the market, so we will see how demand loses strength,” according to Matos. At the moment, the signing of mortgages continues to be higher than the number of sales and purchases: while the latter fell by 7.7% in February, the granting of mortgage loans rose by 0.2%, according to notaries, which shows that the withdrawal of demand is occurring above all in unfinanced operations linked to non-resident buyers and investors, both with a very relevant role in this cycle. But the lack of supply outweighs credit, at least when determining the evolution of house prices. Economist Félix Lores insists that the lack of available housing, especially new housing, is what is most limiting the number of sales. CaixaBank Research reports a deficit of more than 740,000 units. For Álvarez Ondina, the real brake on the market is that there is not enough housing where it is most needed, especially in large urban centers and areas of strong employment and demographic attraction. Furthermore, he believes that this combination—a market that cools in volume, but does not correct prices—can become a structural brake on the country’s economic growth, «by hindering labor mobility, delaying emancipation and putting pressure on business costs in the most dynamic areas.»
More expensive loans
This is what is ultimately preventing prices from falling across the board. In March, new and used housing still became more expensive by 14.7%, according to the appraiser Tinsa. Now, the withdrawal of buyers due to the loss of purchasing power and less favorable credit is beginning to slow down the rates of increase in the most suffocated cities. “Madrid has gone from growing more than 20% year-on-year to around 10%,” gives Francisco Iñareta, spokesperson for the Idealista portal, as an example. In secondary markets or areas with less economic dynamism, the adjustment is much greater on the operations side and prices evolve in a more contained way, indicates Álvarez Ondina. BBVA’s research service predicts that prices will increase by 10.2% in 2026 and 6.8% in 2027. As supply grows and housing construction gains traction, there will be a gradual slowdown in price growth. Matos predicts that they will grow below double digits, “but not in 2026.” Specific adjustments could already begin to occur in overpriced houses or in those that come on the market with unrealistic prices. In these cases, higher trading margins are likely. And “slight corrections in some specific markets would not be ruled out if geopolitical tensions push aggressive increases in financing prices,” believes Iñareta. However, for a general fall in prices to occur, a combination of factors that is not observed today would be necessary: a sharp increase in unemployment, severe credit tightening or an intense supply reaction. «None of that is happening. The housing shortage, especially in the most dynamic areas, continues to act as a floor for prices,» says the CaixaBank Research economist.
