Spain’s housing market is facing a mix of pressures. A rise in interest rates and a cooling in mortgage signings have cooled demand, even as foreign buyers and investors remain attracted to opportunities, and savers seek safer financial products. Yet, the sector has shown more resilience to the latest rate hikes than many analysts expected. Pisos.com forecasts that house prices for sale will grow at a modest pace through 2024, with sales rising by about 2 percent from this year’s level and rental prices edging up by roughly 1 percent. This nuanced outlook reflects a market that balances limited supply with cautious demand.
By the end of 2023, the market appears to have paused the rapid pace seen earlier, while the annual price balance is projected to improve by 6 percent and rental income by 7 percent as the year closes. Ferran Font, Research Director at Floors.com, reiterated that the rise in interest rates and mortgage costs have not triggered a price collapse. Analysts acknowledge uncertainty about whether rates will plateau or ease in the coming months, but caution that demand remains steady and price pressure persists due to a constrained new-construction pipeline. Font notes that last year’s mortgage-heavy purchases were more attractive overall than this year’s opportunities, with mortgage-financed purchases dropping from about 70 percent to around 60 percent in Spain, a share that in some other markets can fall to 50 percent.
Font also points to a broader margin for negotiation between buyers and sellers as demand holds, yet price declines may still accompany high competition. The typical discount off the initial asking price sits near 10 percent, illustrating buyers’ leverage in a market where inventories remain tight and sellers must compete for limited attention.
On the rental side, imbalances between supply and demand remain pronounced. A large portion of demand is driven by renting, rather than purchasing, as access to homeownership remains challenging. This dynamic has heated some urban rental markets, though Font warns that policy and regulatory changes could shift dynamics. The introduction of new housing laws is encouraging some landlords to convert traditional rentals to shorter-term or tourist-oriented arrangements in certain locations, which could reshape rental availability in the near term.
During the presentation of the research, Font projected that housing sales will finish the year about 10 percent lower, at approximately 584,545 transactions, with a further 4 percent decline expected in 2024 to around 561,163 operations. Mortgage signings are forecast to fall by 18 percent by year-end 2023 to 379,954, continuing a downward trend to 336,698 in 2024, an 11 percent decrease. These projections underscore the ongoing sensitivity of the market to borrowing costs and the evolving mix of buyers who rely on mortgage financing versus cash purchases.
Pisos.com also highlights that new construction visas for 2023 total roughly 115,458 and are projected to reach 116,613 for 2024. While these figures exceed minimum thresholds, they remain insufficient to meet the country’s housing needs, underscoring a structural gap between demand and supply that persists despite recent reforms and policy initiatives.
Questions about a government effort to implement a reference index to set prices in stressed regions drew attention. Font warned that such an index could spark conflicts over powers and constitutional concerns, potentially complicating relations with autonomous communities. The broader message is that attempting to cap prices in vulnerable areas may introduce new frictions and unintended consequences, underscoring the delicate balance policymakers must strike between affordability and market functioning. Overall, authorities continue to monitor housing matters closely as the market adapts to shifting financing conditions and evolving regulatory frameworks. [Citation: Pisos.com and Ferran Font]