BBVA Research Predicts Sharper Decline in Spanish Housing Sales, Price Rises

Spain's real estate market is slowing more than anticipated, with BBVA Research now projecting a 7.3% decline in housing sales for 2026. This revised forecast is substantially higher than the bank's earlier prediction and deepens the downward trend already evident in official data.

However, this adjustment in transactions will not ease price pressures. BBVA Research has raised its forecast for housing price increases this year to 12%. This marks a significant shift from March, when the bank expected sales to decrease by only 1.6% and prices to rise by 10.2%. For 2027, BBVA anticipates a slight stabilization, with sales advancing 0.6% and price increases moderating to 5.7%.

The new estimates align with the cooling observed in the market, suggesting a more intense slowdown than other analysts predict. Official data from the National Statistics Institute (INE) shows a 2.6% year-on-year decrease in sales during the first half of the year. Although June saw a 1.6% increase, breaking a five-month streak of declines, this rebound was insufficient to alter the semester's overall trend.

Housing scarcity is limiting transactions while maintaining upward pressure on prices. BBVA Research notes that demand remains supported by relatively low interest rates, employment and wage growth, and the formation of new households. Foreign demand is also expected to remain strong. The core issue lies in the insufficient supply of available housing to meet this demand.

While construction is responding, it is not at a sufficient pace. BBVA Research forecasts a 10.1% increase in housing permits this year and another 12.6% in 2027, with initiated housing units rising from 139,000 in 2025 to 153,000 in 2026. Production is expected to remain below the rate of household formation, leading to a continued accumulation of the residential deficit and sustained price pressure, the report concludes. Beyond traditional supply challenges like land availability and construction costs, BBVA points to the electrical grid's capacity as a potential bottleneck.