Despite the expected drop in the number of transactions (after an increase of 12.2% in 2024 and 4.8% in 2025), the fundamentals of demand remain extremely strong. The report notes that about 540,000 new jobs will be created in Spain this year, and the incomes of employees will grow by 3.5% and 4%. Together with the influx of about 600,000 immigrants, this will ensure the formation of 220,000 new households that objectively need housing.
However, the construction industry is not keeping pace with demographics. According to BBVA forecasts, only 150,000 new construction permits will be issued in 2026, and 170,000 in 2027. These figures, although showing double-digit growth, are critically insufficient to cover the created demand. The accumulated imbalance in the market continues to grow, which explains why housing prices soared by 13.9% in the first quarter, reaching a household income ratio comparable to 2004.
Analysts point out that the price increase alone explains only 30% of the 70% drop in the number of transactions. The rest is due to the structural problems of the proposal. In addition to the slow pace of new construction, the market is suffering from the "drying out" of secondary housing: some properties have been withdrawn from the rental segment due to the introduction of rent controls and regulatory uncertainty. In addition, many owners deliberately delay the sale in anticipation of further appreciation of their assets.
This trend is especially pronounced in the regions with the most favorable economic conditions - Madrid, the Valencian Community and the Canary Islands, where demand remains at its maximum, and the decline in sales is paradoxically the strongest. Experts emphasize that it is the lack of available facilities, rather than the cooling of customer interest, that is becoming the main constraint for concluding transactions.
In the future, BBRA analysts see two scenarios: either a gradual increase in supply due to an increase in building permits that began in 2024, or continued tension. In the latter case, the market will continue to "fever" through rising prices or a further contraction in the number of transactions. The authors of the report call for an early political consensus to address the housing crisis, warning that in the face of global uncertainty, the current supply shortage remains the main threat to housing affordability in the country.
Source: BBVA Research
