Singular Bank predicts that housing prices in Spain will continue their upward trend between 2025 and 2026, with an average cumulative increase of nearly 9%.
In its 2025 real estate outlook, the bank highlights that this ongoing expansion cycle will be fueled by a loosening of monetary policy, strong demographic growth, and a sustained rise in household incomes. “This environment will support both demand and investment across all segments,” the bank stated.
Specifically, the gradual improvement in household purchasing power is expected to lead to a 5.5% increase in gross disposable income in 2025 and 4.5% in 2026. Meanwhile, average household income is forecast to grow by 3.5% and 2.5%, respectively, both figures surpassing projected inflation.
This boost in purchasing power, along with a more favorable interest rate environment—the 12-month Euribor is expected to bottom out around 2.0% in the summer of 2025 before rising again in 2026 if the ECB decides to increase rates—will ease access to credit and further support demand.
Additionally, the mortgage strain rate in Spain fell to a national average of 34.4% by the end of 2024, very close to its historical equilibrium level. This suggests that overall housing affordability has not deteriorated as sharply as commonly perceived.
According to the bank, this combination of factors, particularly in high-demand areas, will continue to drive up both sale prices and rents, with estimated increases of 5% in 2025 and 3.5% in 2026.
**Real Estate Segments**
In the residential sector, the imbalance between supply and demand is expected to worsen, exerting renewed upward pressure on prices. Singular Bank estimates that the accumulated housing shortfall will reach 600,000 units by 2025, indicating that structural demand significantly outpaces the market’s current capacity for new development.
In line with this, new construction will remain insufficient. “Between 2025 and 2026, only around 260,000 homes are expected to be completed, a figure well below what is needed to meet the demands resulting from population growth, migration flows, and the formation of new households,” the bank forecasts.
The report also noted that this shortage is compounded by regulatory constraints, restrictions on land-use changes, and an aging housing stock. “As a result, prices will continue to rise, particularly in regions like Madrid, Barcelona, Málaga, Valencia, and the islands,” it emphasized.
In the commercial sector, falling interest rates and a gradual recovery in rents are expected to compress benchmark yields. The study highlights that this effect will be particularly pronounced in prime office spaces, where yields could fall by up to 70 basis points, leading to a theoretical revaluation of 20% between 2025 and 2026.
More broadly, the report highlights that rising rents outpacing inflation, limited availability of quality assets, and the return of institutional capital are creating a favorable environment for price recovery. This positions Spain as “one of the most attractive markets in Europe,” thanks to its profitability advantage compared to neighboring countries.
The hotel market, Europe’s second-largest investment sector in 2024, is expected to remain appealing to investors, despite projections of slower tourism growth and limited profitability compression, estimated at 25 basis points through 2026. This is attributed to increasing competition, the opening of new hotels, and a slight slowdown in the growth of overnight stays.
Meanwhile, alternative assets such as student accommodation, senior housing, flexible living spaces, and data centers are anticipated to play an increasingly significant role in institutional investment strategies. Their defensive nature, coupled with strong structural demand and “significantly higher risk-adjusted returns” compared to traditional segments, makes them particularly attractive to investors.