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Spain's 2025 Real Estate Market: Insights and Forecast

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As we move into 2025, Spain's real estate market continues to draw attention from investors and foreign buyers alike, fuelled by an impressive economic performance in 2024 and a strong outlook for the coming year. Below, I’ll outline key highlights from Spain’s economic achievements and housing market trends, alongside the anticipated forecasts for 2025.

Spain's Excellent Economic Performance in 2024

In 2024, Spain stood out as one of the fastest-growing economies among OECD countries. According to “The Economist”, Spain was declared the strongest economy of the year among the OECD countries, supported by significant achievements:

- GDP Growth: Spain recorded a 3.1% GDP growth, placing itself at the top among European nations.

- Declining Unemployment: The unemployment rate dropped to 11.2% by the end of the year, a notable improvement from the 26.3% seen in 2013. Projections suggest it will further decline to 10.7% by 2026.

- Controlled Inflation: Inflation ended the year at 2.8%, its lowest level since 2023, with expectations that it will remain at this level or decrease further.

- Tourism Boom: Spain set a new record with 94 million visitors. Only the increase in the number of tourists generated €128 billion in revenue. Projections for 2025 aim even higher, at 100 million foreign visitors. Regions like Catalonia, the Balearic Islands, and the Canary Islands remained the most popular destinations.

- Real Estate ROI: Investors in buy-to-let operations saw returns averaging between 4 and 6% but reaching 7.3% in areas popular with foreign buyers.

Real Estate Trends in 2024

The real estate sector in Spain showed growth despite challenges like rising mortgage rates and an ongoing lack of property supply:

- Price Growth: Real estate prices increased by 9.6% on average in 2024, with new developments seeing over 10% growth and second-hand properties rising by 8.6%.

- Valencia led with a price increase of 19.8%, followed by the Balearic Islands at 19.5%, and Madrid at 13.6%. Alicante (within the Valencia region) is the city that registered the highest increase, at 21.3%.

- Rental Market Adjustments: Long-term rentals experienced a drastic drop of 57% in availability due to Spain's Housing Law, pushing rental prices up by 11.5% over the year.

- Foreign Investors: Over 87,000 properties were purchased by foreigners, representing 15.2% of all real estate transactions. The British, French, Germans, Italians, Dutch, and Belgians dominated buyer demographics, with a 12% increase in purchases by U.S. residents.

Conclusion: Is It A Good Moment To Invest in Spain?

Yes!

For anyone considering buying property in Spain, 2025 presents a favourable opportunity. The country’s thriving economy, growing tourism sector, and increasing demand for housing make it a promising choice. Whether you're looking for a second home, a rental investment, or a relocation opportunity, acting sooner rather than later could help you take advantage of rising property values in a strengthening market.

Feel free to reach out if you have questions or want guidance on securing your dream property in Spain. The time to act is now!

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