The summer saw a new record for house prices in Spain, but a downward trend in growth is becoming noticeable. According to Idealista, real estate sales are already falling, which means prices may also be adjusted. Read about what is happening in the Spanish real estate market in the article.

About the situation in the Spanish real estate market in 2023 in general

Residential property sales in Spain fell 16.5% year-on-year and mortgage lending fell 14.5%. On the other hand, new home prices are still rising, up 0.8% year over year thanks to strong construction activity.

New home prices hit a record €2,158 per square meter, up 4.6% over the past 12 months, according to the latest property registrars report for the third quarter. This growth also influenced the average housing price, which reached 1935 euros/sq.m. over the past year, which is the highest since 2008.

In the secondary housing market, 11 communities recorded annual growth, while in the new-build segment, growth was recorded in 16 autonomous communities, with the exception of Galicia. The maximum increase in prices was seen in Navarre (10.7%), La Rioja (5.4%), Madrid (5%) and the Canary Islands (4.3%).

Regions with high prices for new homes include the Basque Country, Balearic Islands and Madrid, exceeding the €3,000/sqm mark, while Castile-La Mancha and Extremadura remain the most affordable with prices under €1,200/sqm.

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About the situation on the Spanish real estate market in the third quarter of 2023

Despite record prices, the market remains moderate. The average house price decreased by 0.3% in the third quarter compared to the previous one, mainly due to lower prices for new buildings.

Home sales fell 7.8% in the third quarter, an annual decline of 16.5%. New home sales decreased by 12.4%, while existing home sales increased by 0.6%.

The number of residential mortgages fell 2.9% in the third quarter, an annual decline of 14.5%. Rising interest rates have had an impact on activity in this sector.

Foreign investor interest in Spanish real estate remains at 15.4%, down slightly but remaining at a high level. The most active investors remain British, and overall demand in regions such as the Balearic Islands and Valencia continues to support strong sales volumes.