From €300,000 to €850,000 in nine years: bubble or new reality?

The Ríos Rosas flat: bubble or the new normal?

A friend has discovered that his flat, bought in 2017 for €300,000, is now worth €850,000. The story, circulating these days, serves as a thermometer for a market that gives no respite. The 183% revaluation in nine years is brutal, but the nuances matter.

The numbers behind the killing

The owner mortgaged €200,000 at 1.85% and put €25,000 into renovations. Today, with deposits at 3%, his debt seems a gift. But if he sold, Hacienda awaits: between income tax, municipal capital gains and legal costs, about €56,000 would go in taxes, according to calculations based on similar cases. Discounting inflation — which has eaten 40% of purchasing power since 2014 — the net annual return is 4.8%. Less than the Ibex 35, which has delivered two consecutive years above 15%, or the 10-year US bond, with no risk.

Bubble or structural scarcity?

Here society splits in two. Bubble supporters recall 2008: same rhetoric, same "this time it's different." They point out that demand is fed by anxiety about being left out, and that when sentiment changes, the collapse will be similar. But supply data sing a different tune. In 2006 Spain completed 650,000 homes a year; in 2025 barely 87,000. The adult population increases by a million each year. The equation is textbook: when demand systematically exceeds supply, prices rise. It's not a bubble, it's a chronic mismatch that no government has wanted to correct.

The enemy at home: taxes and foreigners

Some argue that the State is the only winner: each sale fattens the coffers with 6% ITP (property transfer tax). And anyone selling to buy another home finds the market just as expensive up the ladder. "It only improves if you sell and don't buy," they say. Another factor that has entered forcefully is foreign demand: for an overseas buyer, the financial effort is one third that of a national. In areas like Ríos Rosas, the flat is paid for in euros that are worth less abroad, and that has created a price floor that natives cannot afford.

And when will the adjustment come?

Skepticism about an immediate correction is great. As long as construction doesn't keep pace and money continues to lose purchasing power, real assets — bricks, gold, stocks — will continue to appreciate. Some predict a 10% drop trinc by an 80% rise, an inflationary megacycle that spares no one. Perhaps the friend who bought in 2017 made the best move of his life. Or perhaps he got on a Ferris wheel that will stop one day. For now, the carousel keeps turning.