Spain’s versatile residential real estate market combines large cities with flourishing economies such as Madrid and Barcelona with coastal regions and islands, attractive for investors interested in the vacation rentals. The country’s capital, Madrid, registered almost 40,000 free housing transactions in 2023 –
and two times as many as in the second-largest city - Barcelona. The capital of the Balearic Islands, Palma de Mallorca, registered a total of about 5,000 residential real estate sales. The profitability of residential real estate with investment purposes varied across different cities, but
were Gandia (Valencia), Manga del Mar Menor (Murcia), and Laredo (Cantabria).
Development of house prices in Spain
The housing market in Spain took a major hit during the Spanish financial crisis (2008-2014), with both house prices and rents plummeting after the burst of the housing bubble. Since 2016,
house prices have risen year on year and in October 2023, the average square meter price of residential real estate exceeded 2,000 euros, almost reaching 2007 levels. Rents have also been
on an upward trend, peaking at 12.1 euros per square meter in 2023. Though well below the levels before the crisis, the surge in both house prices and rents has raised major concerns about the affordability of housing. As a response, the Spanish government passed a new law in early 2022 tackling the housing affordability issue. Some of the measures include provisions to reserve 30 percent of newly constructed units for affordable housing, tax penalties for owners who keep multiple rental homes vacant for prolonged periods, and the option for regional governments to impose rent caps on rental housing owned by large landlords in stressed markets.
Focus on key markets
Unsurprisingly, the big economic centers in the country tend to have more active housing markets and fetch higher house prices. Bordering France and the Cantabrian Sea in the Bay of Biscay, Gipuzkoa was the
second-most expensive Spanish province in 2023, followed by Madrid. The average house price in both provinces exceeded 3,000 euros per square meter in December 2023. Individual districts within cities also varied greatly.
Madrid’s Salamanca, Chamberi, Chamartin, and Centro districts, as well as Barcelona’s Sarria-Sant Gervasi and L’Eixample
boasted house prices of over 5,000 euros per square meter in December 2023 – more than double the national average. Famous for its beautiful architecture, walkability, and cultural life, Barcelona’s status as a popular destination for both tourists and expats has earned it a spot among
the most expensive cities for rental properties in Europe.
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Due to varying update cycles, statistics can display more up-to-date
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