Why are property prices in Spain rising twice as fast than in the EU?

Spanish property prices are rising at twice that of the European average, new figures have shown.

According to Eurostat figures released at the end of June, house prices rose by 5.1 percent across the EU during the first quarter of the year compared with the same period in 2025.

However, Spain had a 12.8 percent rise in prices — more than double — surpassed only by neighbouring Portugal (17.8 percent), Bulgaria (14.8 percent), Slovakia (14.4 percent) and Croatia (14.3 percent).

This comes as both Spain and Iberian neighbour Portugal pledge to “step up scrutiny of soaring property markets”, according to a recent report from Reuters news agency.

READ ALSO: Why do prices keep rising if property purchases are falling in Spain?

“Unlike ‌elsewhere in the euro zone,” the report notes, “the Iberian peninsula is seeing a real estate market boom amid strong demand and tight supply”.

However, some experts warn of consequences down the road. Antonio Luis Gallardo of Spanish consumer group Asufin warned Reuters “that sustained house price increases raise the risk of a future ​correction, as demand is increasingly stretched.”

So, what’s going on here – why is the Spanish market experiencing prices outpacing the rest of the bloc?

High demand, low supply

There seem to be several factors at play here.

Put simply, prices have been impacted by a combination of low supply and very high (and growing) demand from different profiles of buyers in Spain is spurring population growth.

A proliferation of short-term tourist rental accommodation, the object of anti-tourism activism in Spain in recent years, has also further hindered supply.

Combined with a shortage of affordable social housing and bureaucratic red tape making building projects difficult, in Spain the few properties there are left (in desired city and coastal locations, it should be said) are soaring in price.

A recent annual report by the Banco de España report noted that “supply constraints are limiting the production of new homes, with growth in this area remaining consistently below demand.

“The current stock of existing homes offers little scope for expanding the residential supply in the urban areas experiencing the strongest economic growth,” it adds.

Immigration, tourism and urban sprawls 

Then there’s the bogeyman of the Spanish property market and anti-tourism movement.

Or better put, short-term tourist accommodation further pilfering from the already underserved property market.

Focusing on tourist accommodation and non-resident property buyers, the bank also noted: “Purchases by non-residents and the use of housing for tourism purposes reduce the stock available for residential use in areas along the Mediterranean coast, on the islands and in tourist centres in major cities.”

The paradox of the Spanish property market is that eye-watering price rises in places like Madrid and Barcelona come as the majority of properties sit empty in rural, inland Spain.

A recent report, Poblaciones en peligro, published by Spain’s Rental Observatory showed that seven in ten homes empty in Spain’s villages in midst of national housing crisis

READ ALSO: Seven in ten homes empty in Spain’s villages in midst of national housing crisis

However rising immigration levels propping up population growth and employment mean that people increasingly move to urban sprawls that are already underserved by accessible housing, further driving up demand and driving the rural-urban disparity in Spain.

In terms of tourist properties, though companies like Airbnb are at least attempting to entice rural Spain, the vast majority go to already overheated tourist markets with dwindling demand.

READ ALSO: Airbnb demands Spain adopt different rules for tourist rentals in rural areas

Housing stock shortfall

Spain’s social housing stock, or lack, therefore, also plays a role in driving up prices.

Spain has very limited social housing and among the smallest rental offerings in Europe – something that further forces potential buyers into the rapidly rising private market.

In fact, according to Associated Press: “Spain ranks near the bottom of Organisation for Economic Co-operation and Development countries with public housing for rent, with under 2 percent of available supply.”

For context, the OECD average is 7 percent. France its 14 percent, Britain 16, and the Netherlands 34, AP notes.

READ ALSO: Bank of Spain supports limits on short-term lets to curb housing crisis

More foreign buyers

Then there’s the strong presence of foreign buyers (especially non-resident) who could also be partly to blame. International demand is particularly strong in coastal areas and major cities, adding upward pressure on prices.

Data shows that last year there was a small decline in non-resident foreign buyers following the scrapping of Spain’s Golden Visa, and perhaps more vocal animosity of locals towards foreign home buyers and anti-tourist sentiment in Spain, but a strong post-pandemic influx of wealthy foreign buyers, especially non-EU (notably Americans) has further tightened the market by paying higher prices and locking locals out of the market.

READ ALSO: Ten key golden visa stats as Spain axes scheme for wealthy foreigners

It is for this reason there have also been moves by national and regional governments (Canary and Balearic mainly) to limit foreign homebuyers in Spain.

Prime Minister Pedro Sánchez announced in early 2026 that he would slap a 100 percent tax on Spanish property purchases by people who reside outside of the EU, a proposal which would double the property price for them if it came into law (it hasn’t).

Planning and construction constraints

Then, of course, there’s the underlying issue propping up these different market problems: a lack of house building.

Many in Spain blame bureaucratic backlogs and red tape for slowing down projects and bogging down permitting processes.

Complicated land-use regulations and appeals processes in Spain also mean that many house building projects can be slowed, stopped or blocked, and post-pandemic prices rises mean that the prices of materials, energy and labour have risen, making the construction of new homes more expensive and limiting supply.

The Local has covered this issue at length, including how in Spain ‘Red tape takes longer than building homes’.

Beatriz Toribio, general secretary of the Spanish Association of Construction Developers, told Spanish online outlet 20Minutos that, incredibly, paperwork can in some cases take longer than the building project itself: “It takes longer to develop land and manage licences than it does to build,” she said.