Bankinter's latest projections indicate that housing prices in Spain will continue to grow steadily in the coming years, surpassing inflation rates. For 2024, the bank anticipates an 8% increase, followed by a 5% rise in 2025.

Key Factors Driving Price Growth

Several critical factors underpin this upward trend:

• Interest Rate Reductions: Expected decreases in interest rates will boost housing demand.
• Stable Labor Market: Spain's robust job market supports local buyer confidence.
• Limited Supply: A shortage of new housing construction fails to meet growing demand.
• Rising Rental Prices: Rental prices have increased by 11% in 2024, encouraging more people to consider purchasing homes.

Major Increases in Cities and Coastal Areas

The most significant price hikes are expected in major cities such as Madrid and Barcelona, as well as along the Mediterranean coastline and on the islands. Foreign buyers play a crucial role in these markets, accounting for one in five transactions in Spain, with purchasing power often exceeding that of local buyers.

No Signs of a Housing Bubble

Despite the prolonged price growth—up 56% since 2014—Bankinter rules out the possibility of a new housing bubble. The bank points to strong market fundamentals, including improved affordability ratios, manageable repayment levels, and a limited housing supply, which contrasts sharply with the oversupply that fueled the 2008 housing crisis.

Positive Outlook for the Real Estate Sector

Bankinter sees promising opportunities in the real estate sector, particularly in economically linked assets like offices, shopping centers, and residential properties. Companies such as Colonial, Merlin Properties, and Aedas Homes are highlighted as top investment options with significant growth potential.

Looking Ahead

By 2026, Bankinter forecasts a moderation in price growth to around 3%, with prices aligning closer to inflation levels of approximately 2% by 2027. This outlook suggests a stable and attractive real estate market for both domestic and international investors.

Source: Bankinter and Idealista News