Home valuations jump nearly 14% despite forecasts of a slowdown in Spain’s property market

Spain’s housing market accelerated sharply at the start of 2026, contradicting earlier forecasts that rising prices and stretched affordability would begin cooling the country’s property boom.

New data from CaixaBank Research showed the appraised value of free-market housing—known in Spain as valor de tasación—rose 13.9% year over year in the first quarter, up from 13.0% in the previous quarter and well above expectations.

On a quarterly basis, prices climbed 3.8%, nearly matching the 3.6% pace recorded at the end of 2025. The average valuation reached €2,315.70 per square meter, marking the third consecutive quarterly record in data stretching back to 1995.

Spain housing prices continue rising in 2026

The latest figures complicate the growing narrative that Spain’s housing market is entering a cooling phase after several years of explosive growth.

Earlier reports from Funcas and Oxford Economics had pointed to slowing transaction volumes, tighter affordability and weakening foreign demand as signs the market was beginning to lose momentum. A May report highlighted falling home sales and a moderation in some overheated regions, particularly among non-resident foreign buyers.

But the latest valor de tasación data suggest that while activity may be stabilizing, price pressure remains intense. The discrepancy largely comes down to the difference between transaction volumes and supply dynamics.

Economists argue that Spain is no longer facing a classic speculative boom driven purely by easy credit or investor exuberance. Instead, the market is constrained by a structural shortage of housing supply—particularly in major urban and coastal regions where population growth, immigration and tourism-related demand continue to outpace construction.

CaixaBank Research estimates Spain is now facing a housing deficit of more than 730,000 homes. New housing permits rose 9% year over year through March to roughly 141,000 units, but household formation surged far faster, with 242,200 new households created over the same period.

Spain is building homes, however, just not fast enough.

Five-year trend: Spain home valuations keep climbing

Estimated average appraised housing value in Spain

Source: CaixaBank Research, Spain's Ministry of Housing valuation data, market estimates.

The latest surge places Spanish housing valuations close to nominal record highs, although CaixaBank Research notes prices remain roughly 23% below pre-2008 bubble peaks after adjusting for inflation.

Foreign buyers slow slightly, mortgages rebound

One notable shift in 2026 has been a modest slowdown in purchases by nonresident foreign buyers, following several years of exceptionally strong demand from international investors and second-home buyers.

Foreign buyers represented 13.8% of all transactions over the past 12 months, totaling roughly 96,700 purchases. While that figure slipped slightly year over year, it remains historically elevated.

Why prices are rising even as sales slow

Home sales fell 2.6% year over year in the first quarter of 2026, according to Spain’s National Statistics Institute. Yet economists say this appears less like a collapse in demand and more like a market running into supply constraints and affordability ceilings.

At the regional level, the gains remain uneven but broad-based. Cantabria, Valencia, Madrid, Aragón and Asturias all recorded annual price increases above 15%, while Extremadura posted the slowest growth at 6.3%.

Perhaps most strikingly, 82% of Spanish municipalities with more than 25,000 residents recorded annual price increases above 10% in the first quarter—the highest share since records began in 2006.

At the same time, Spain’s mortgage market has strengthened considerably. The number of residential mortgages rose 9.7% year over year in the first quarter to roughly 131,500 loans—the strongest start to a year since 2011. The average mortgage size also continued rising at double-digit rates, reaching approximately €172,300.

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Lower European Central Bank interest rates earlier in the cycle helped revive borrowing demand, and strong labor market conditions continue supporting buyers with stable incomes.

Slower home sales, but prices likely stay elevated

Most economists now expect Spain’s housing market to shift into a slower but still inflationary phase rather than an outright correction. CaixaBank Research estimates housing prices will rise around 10% in 2026. However, stronger-than-expected first-quarter data introduces an upward bias to this forecast; if the market simply maintains CaixaBank's originally projected quarterly growth pace for the remainder of the year, the annual growth rate would reach 11.6%.

On the other hand, higher prices and worsening affordability will likely push buyers out of the market, especially foreign investors and younger households without large savings buffers. Still, most agree a nationwide price decline remains unlikely unless Spain experiences a sharp economic downturn, rising unemployment or a sudden surge in housing supply.