According to the latest “Real Estate Watch” report by BBVA Research, Spain’s housing market in 2025 continues to operate under conditions of structural undersupply. The report highlights that labour shortages, lengthy land‐rezoning procedures and regulatory uncertainty are constraining both construction activity and investor appetite. 

The publication presents the following figures. Between 2021 and 2025, unmet housing demand accumulated to roughly 625,000 households. In 2025, new housing starts are expected to increase by 10%, and in 2026 by 12%, although this will still be insufficient to compensate for the existing shortfall. 

Housing prices in Spain continue to rise. In the first half of 2025, annual price growth reached 9.7%, despite a slowdown in transaction activity. 

The number of housing transactions — across both new and existing units — is increasing. In the first eight months of 2025, overall sales volumes rose by 5.9% compared with the same period last year. At the same time, the report notes a decline in non-residential transactions and in purchases made without mortgage financing. 

The main factors constraining supply include insufficient labour availability, rising construction material costs and administrative difficulties in securing development permits. These conditions reduce development margins and limit the willingness of developers to launch new projects. 

BBVA forecasts that prices will continue to grow: average annual price growth is expected to reach around 10% in 2025, with a possible 7% increase in 2026. A moderate rise in new supply is anticipated, but it will not be enough to bring the market into balance. 

Commentary from M24 Investment Division:

The data indicates a persistent structural shortage of housing in Spain, with limited capacity in the construction sector to increase output. Price growth continues to outpace the delivery of new units, while key constraints — labour shortages, material costs and administrative delays — remain unchanged. The projected increase in construction activity in 2025–2026 will not offset the accumulated gap between supply and demand, supporting an elevated price trajectory in the medium term.