The Spanish real estate market accelerated noticeably in 2025. According to Spain's national statistics office (Instituto Nacional de Estadística, INE), the transaction-based Housing Price Index rose 12.9% year-on-year in the fourth quarter of 2025 — existing housing up 13.1%, new housing up 11.2%. On a quarter-on-quarter basis, prices climbed 1.8%.
Demand for housing remains firm
The recovery follows a period of price stagnation between 2008 and 2015. Since then, demand in Spain has grown structurally, driven by domestic purchasing power and sustained interest from abroad. CaixaBank Research describes the market as entering a new expansionary phase, with growing supply shortages in major cities.
Foreign buyers: 13.52% of the market
In Q4 2025, foreign buyers represented just over 24,200 transactions — 13.52% of all registered home purchases. On a rolling twelve-month basis the share came in at 13.82%, slightly below a year earlier (14.60%). According to the Spanish Asociación de Registradores, the dip is not the result of weakening foreign demand but of a faster-growing domestic market.
Regional differences
Spain is not one market but three. Madrid and Barcelona function as institutional centres with high prices per square metre and stable professional rental income. The Costa del Sol, the Balearic Islands and the Canary Islands attract mainly holiday and lifestyle buyers; rentals here are seasonal with higher gross yields. Rural Spain and smaller coastal towns make up the third category, with lower entry prices and stronger percentage price increases.
Share of British, German and French buyers
According to the Asociación de Registradores, Britons have for years been the largest group of foreign buyers, followed by Germans and French. Dutch buyers consistently feature in the top ten. Moroccan and Romanian buyers form distinct segments, often focused on residential property in second-tier locations.
Legal framework for foreign buyers
In principle, Spain places no restrictions on real estate purchases by foreign individuals or companies. A Spanish tax number (NIE) is mandatory for the notarial deed. For non-EU buyers, additional source-of-funds checks have applied since January 2025 — a consequence of the tightened AML directives at European level.
Taxes on transaction and ownership
When buying existing housing, transfer tax (ITP) applies at 6 to 10 percent depending on the region. New housing is subject to 10% VAT plus 1.5% stamp duty (AJD). The annual property tax (IBI) typically ranges between 0.4 and 1.1 percent of the cadastral value. Rental income is taxed at 19% for EU residents and 24% for other non-residents under the Impuesto sobre la Renta de no Residentes. On sale, capital gains tax depends on holding period and resident status.
What the market signals for 2026
CaixaBank expects continued price increases at a more moderate pace in 2026, with strong underlying fundamentals. The ECB rate pause of December 2025 — deposit rate held at 2.00% — confirms the end of the rate cycle for now. Lower financing costs are supporting Spain's mortgage market, which posted a notable recovery in 2025 with more new mortgages than in 2024.
This article is for information purposes only and does not constitute investment or tax advice. Market figures are based on public sources available at the time of publication.
Sources: INE · CaixaBank Research · Agencia Tributaria · European Central Bank