Spain's housing market stalls: more homes for sale, fewer buyers

Spain's housing market stalls: more homes for sale, fewer buyers

Is now a good time to buy a home? The question has gone unanswered for twenty years and, judging by what's brewing in the market, it will stay that way a while longer. The data used by the most active buyers paints an uncomfortable picture: **twice as many sale listings as a year ago** in Madrid's larger districts, while mortgage foreclosures surge and sales fall. It's not a collapse. It's something rarer: a market that refuses to lower prices even though fewer and fewer people can afford them.

The paradox has an explanation. **Barely anything is being built** — the most repeated diagnosis — and people who need somewhere to live keep arriving. New supply is scarce, second-hand stock piles up on the portals, and the result is a gridlock: flats listed at 2025 prices sit for a month or two, then get cut by 3%, or are delisted and reappear fifteen days later slightly cheaper. What actually closes, say the notaries.

More listings on the portals, same impossible prices

The phenomenon is clearly visible in Madrid. Since the election was called and the subsequent decrees, rental listings have halved and sale listings have doubled compared with the previous year. On paper, more supply should cool prices. In practice, it doesn't: sellers are in no hurry or can't afford to sell for less, and the buyers left are stretching their credit to the limit. **A market of no market**, they call it: little supply willing to cut prices and plenty of demand that can't reach them.

The case of a flat in a trendy village near Barcelona is illustrative. Price: between 400,000 and 500,000 euros. **Between 25 and 30 viewings and not a single offer.** The estate agency suggests something is being done wrong. Or perhaps the problem isn't the shop window, but the size of other people's wallets.

New-build raises the bar a month after the appointment

New-build development in Málaga deserves a chapter of its own. A buyer on a waiting list gets a call: three-bedroom, south-facing, "from 437,000 euros." A month later, at the appointment, the sales rep tells him the cheapest one is **510,000 plus VAT**. An eighty-thousand-euro "adjustment" in thirty days. The seller's response: prices have been updated. The buyer walks away feeling he has attended an auction in which he was the only bidder and lost anyway.

It's not an isolated case. In another development, those who bought off-plan in the first phase paid **130,000 euros less** than those who entered the second phase three years later. No salary keeps up with that gap. And in mid-range areas, flats that sold for 120,000-130,000 euros before the pandemic now appear at 250,000. The final tally — property transfer tax, notary, registry, agency commission, capital gains taxes — explains part of the climb, but not all of it. The rest is expectation.

Euribor rises and foreign buyers think twice

The backdrop is financial. Euribor is climbing sharply, making the average mortgage more expensive just when buyers need more financing to pay higher prices. In Mallorca, German buyers — who used to leverage their homes in Germany as collateral — are starting to step back. A local estate agency describes it as a terrible year: **they only look, they don't buy**. The Dutch of dubious provenance and the money-laundering mafias would be the replacement, according to the same source. Plenty of trust there.

The Balearic Government has responded by handing out property transfer tax (ITP) breaks: for young people, for those over a certain age, with 50% rebates in some brackets. The measure is met with scepticism. The average age of buyers in Spain is around **49**, suggesting that a good share of transactions are not first-time purchases but investments or moves. If the speculator goes off to bonds, the government tries to get the young to take his place. Or so it seems.

Will prices fall? The demographic argument and the credit one

The clash of theses is head-on. On one side, those who argue prices can't fall because the population has grown by **more than two million people since 2010** while only 1.3 million homes were built. On the other, those who reply that solvent demand is not the same as total demand: if a hundred homes are fought over by a hundred thousand people, the hundred who pay the most win, and that doesn't miccionan the price is sustainable for an average family. Affordability, not scarcity, would be the real thermometer.

The comparison with 2008 doesn't convince everyone. In 2008, 120% mortgages were handed out for temporary jobs and construction ran unchecked. Today nothing is built, financing rarely exceeds 80%, and credit is more expensive. The parallel, they say, is only in price. The outcome, who knows.

The buyer who waits and the seller who won't budge

Meanwhile, the average buyer does the maths. Whoever bought to live in, they say, couldn't care less whether prices rise or fall. Whoever didn't buy pays double for housing, higher interest and 50% more for basic groceries, if they're lucky with a 20% raise. An entire generation is screwed, and not just because of property.

Some are waiting for the planned cut to the property transfer tax (ITP) in Madrid in 2027 and prefer to hold off a couple of months. Some are thinking of selling now and not buying. And some, after twenty years of forecasts, no longer know whether this is a bubble, a remake or simply the new normal. The dry irony: the Spanish property market, that asset that never falls, has spent two decades rising and falling depending on who you ask.