Revealed: This is where property prices are growing the fastest in Spain

PROPERTY prices are climbing ever higher in Spain as demand outstrips supply.

Since 2019, only the Balearics have seen faster price rises than Andalucia, according to a report by BBVA Research.

The ‘Real Estate Observatory 2024′ reports that both new and existing homes have increased in price by just over 20% since 2019.

Despite the boom, BBVA estimates that prices are yet to reach the peaks of the previous real estate bubble from two decades ago.

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Current prices are still 8% (new homes) and 10% (used homes) below those levels – only Madrid and the Balearic Islands in Spain have surpassed 2000s prices.

The Canary Islands has seen the sharpest price rise, with houses being 16.4% more expensive than a year ago, according to the latest report from idealista.

It is followed by the Balearic Islands (11.9%), the Valencian Community (11.5%), the Community of Madrid (11.5%), the Region of Murcia (8.8%), Andalucia (8.7%). 

By province, forty-five have higher prices than a year ago, led once again by Santa Cruz de Tenerife, where seller expectations rose by 18.6%.

Second comes Las Palmas (13.5%), then Malaga (12.2%), the Balearic Islands (11.9%), the Community of Madrid (11.5%), and Alicante (11.3%). 

By cities, the most significant rise was in Malaga, where seller expectations grew by 18.2%, followed by Alicante (18%), Soria (17%), Valencia (16.1%), Santander (15.6%), and Madrid (15.5%). 

In major markets, besides Málaga, Alicante, Valencia, and Madrid, prices also rose in Palma (8.9%), Barcelona (8.2%), Seville (7.3%), Bilbao (6.3%), and San Sebastián (5.1%).

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Melilla (0.3%) saw the smallest increase, followed by Pamplona (1.1%), Palencia (1.8%), Vitoria (2.1%), and Pontevedra (2.4%).

With this increase, the price in Madrid is now €4,622 sqm, while in Barcelona it stands at €4,477 sqm.

Across Spain house prices rose by 3.9% in 2023 and 4.3% in the first quarter of 2024, with forecasts predicting a 5% increase in 2024 and 4.7% in 2025.

Key factors driving this trend include a booming economy, higher family incomes, demand from foreigners and lower interest rates.

Per square metre, the Balearic Islands cost €4,445, followed by the Community of Madrid (€3,504). 

Next are the Basque Country (€2,945), the Canary Islands (€2,636), and Catalonia (€2,397). 

On the other end, the most affordable regions are Castilla-La Mancha (€939), Extremadura (€976), and Castilla y León (€1,198).

Across the country, the average price of an existing home has hit a record €2,153 per square metre in July – a 7.9% jump compared to the same period last year, according to idealista.

While Spanish authorities furiously try to build new houses, supply is still expected to fall short of meeting the growing demand. 

BBVA forecasts 120,000 construction permits in 2024, an increase of 10,000 from the previous year.

The first four months of 2024 saw a 14.8% growth in permits compared to the same period last year, indicating a new construction cycle driven by increased demand and greater interest from local authorities. 

However, challenges such as zoning issues, labour shortages, and regulatory uncertainty continue to hinder new projects.