Summary
The Bank of Spain's 2025 annual report concludes that Spain's housing market is undergoing a vigorous expansion, yet - based on the central bank's assessment - it is not generating the same financial stability risks seen in previous property booms. Prices, transaction volumes and mortgage lending all rose during 2025, but the central bank says indicators of risk linked to the property sector remain contained. Authorities are urged to coordinate to increase housing supply and tackle affordability pressures.
Spain's housing sector registered notable growth in 2025 across several metrics, according to the central bank's yearly assessment. Adjusted for inflation, prices increased at an annual rate of 9.7% in 2025. Despite this rise, the report notes that in the first quarter of the year inflation-adjusted prices were still 12.2% below the peak reached in 2007, prior to the collapse of the earlier real estate bubble.
Transaction activity also climbed. Property sales exceeded 750,000 in 2025, a level comparable to activity seen in 2008, though the central bank highlights that sales are lower relative to population size given recent immigration.
Mortgage financing sustained the expansion. About 52% of home purchases in 2025 were financed with mortgages, a share that remains under the highs recorded during the boom era. New mortgage lending grew by 27.5% in 2025. The central bank is considering the introduction of limits on this type of credit, the report states.
Lower interest rates contributed to the surge in lending. Since late 2023 rates have fallen by roughly 150 basis points, supporting mortgage growth. Fixed-rate loans accounted for around 80% of new mortgage lending in 2025.
Despite the momentum, the Bank of Spain characterizes financial stability signals tied to the property market as subdued. "In particular, the indicators that signal the existence of risks and vulnerabilities to financial stability associated with developments in the property market remain at contained levels," it said on Thursday.
The report also highlights socio-economic tensions arising from the housing situation. Policymakers face a challenge balancing support for tourism - an important economic sector - with concerns over high rents and home prices. Affordability problems and a shortage of new housing are cited as factors reducing rates of homeownership and delaying young people leaving their parents' homes.
To address these pressures the Bank of Spain recommends coordinated policy efforts by central, regional and municipal authorities to boost housing supply and to reduce what it estimates as a shortfall of 750,000 homes.
Contextual note
The report provides the Bank of Spain's assessment without assigning new causal claims beyond the data and observations presented within the document.