The Truth About Spain's Property Market in 2026 – Transcript

00:00Spain's housing market has radically changed over the past 5 years. The government— you think it's worse? Yeah, much worse. It's a supply problem. That is a red flag. That is a major red flag. Where do you see prices heading? Like, I think property prices will— the question is, should they be buying a property now? Should they wait?

00:20It's an age-old question. Um, is this a bubble or is this the beginning of a new era? Today we're joined by expert property lawyer Raymond Larraine Nesbitt to talk about exactly what's happening in the Spanish property market. Raymond, welcome back to the channel. It's good to have you here again. I've got a tonne of questions, everything that's got to do with

00:48Spanish housing, property market, what's going on. Before we get into the questions, Raymond, can you give the audience a bit of a background on who you are and your sort of experience. So I'm a conveyance lawyer, so I'm the managing director of a Spanish law firm. We specialised in visas, property conveyance, and taxation, and our client base are foreigners.

01:12The big picture: where is Spain's housing market today? So if you had to explain the housing market to someone that's taken a break from Spain, hasn't been here for the last 5 years, you know, gone to Australia and just come back to where we are today, How would you explain what's happened over the last 5 years? Property prices have gone up sharply in a short space of time. So although it's not, as I say, it's not properly a property bubble, the effects are exactly the same.

01:38So I would, I think it would be more precise to call it the anti-bubble, as opposed to the 2008, whereas in 2008 we had a credit-fueled property bubble, which is driven by greed. So people people bought properties to flip them and pass them on, and that drove prices going up all the time. This time is different. This time it's a supply problem.

02:02There's a demand outstrips supply by a long shot, and this drives prices continuously upwards. So why do I call it an anti-bubble? Because it's like if we had gone from one extreme to the other, an extreme of building a lot of houses and suddenly demand dropping because of the 2008 crisis, and then property prices just crashed by 50% nationwide, as to now where we're almost

02:27building no houses whatsoever a year, but there's still a huge demand. So, so that's why I say it's gone from one extreme to the other, and this has fuelled this surge in property prices nationwide. So there is a clear gap between the amount of properties that the Spanish housing market needs and the amount of properties that Spain is building. Can we talk about the figures?

02:47Just throw some figures out there. Where, where are we today and where do we, we need to be? Okay, so to contextualise this, we have to again look back at 2008. So back in 2008, Spain was building around 700,000-750,000 houses a year, which is crazy. That's crazy. Yes, it was the same amount combined as the UK, France, Italy, and Germany. It was crazy. So obviously

03:12that was a huge problem. So after the Spanish government learned from the fallout of the 2008 property crash, different administrations— I'm talking of every political side— they decided to cut down on building homes. So this is why we need to contextualise to understand where we're at nowadays. So nowadays we're building under 90,000 homes a year, and we've run into a deficit of

03:39in or around 750,000 homes. But that figure, which is what most public institutions give you, such as the Bank of Spain, is not exactly correct because the government— You think it's worse? Yeah, much worse. Yeah, exactly. Because the government approved last month a new migration rule whereby they are nationalising and regularising

04:04migrants. Initially it was forecasted at 450,000, then it went up to 650,000, then to 900,000, and now the latest figure is 1.3 million. Within a short space of time of only 4 years. So that is going to have a huge impact on the housing market.

04:20So let's just, you know, look at the Spanish population, right, from where it was 10 years ago to where it is today, right? I mean, we're around 50 million people today, is that right? Just under 50 million people. We've grown by 3 million, is that right? Yeah, almost 4 million. Back in 2016, 10 years ago, we were 46.3, 46.4 million, and now we're almost 50 million.

04:41That's in 2000? This is 2026. And when was it 46 million? 10 years ago. 10 years ago, okay. So like, even if like, imagine from, I don't know what the building amounts were from 2016 onwards, but like, it's just the growth of 4 million people over 10 years means that we would need, you know, millions of additional properties in certain areas, no? But there's something about Spain, and you know, we talk about Spain on the channel a lot, and we talk

05:08about Spain as one, but Spain is quite diverse. You know, it's not the same to talk about our coastline, Malaga, than it is to talk about, you know, Madrid, Barcelona. How would you like, you know, define the Spanish property market in its different facets or different areas?

05:26It's complex, it's multi-layered. So there's not just one driving economy, there's different markets. So as you say, we have the large Spanish cities, such as Málaga, Madrid, Barcelona, Valencia, there are not many foreigners there. It's mostly Spanish-driven demand, native.

05:43Domestic. Yeah, domestic. And well, obviously South American migrants as well. And prices there are, you know, they've come up by 2 digits, an average of 13-14% in Madrid, for example, in Valencia, Barcelona. So it's a huge problem. But then you have the España interior, the interior of Spain, which is depopulated, is una España vaciada, where the young people from villages and small towns,

06:09they seek better job opportunities, higher wages, and so they migrate, they travel to large cities such as the ones we've already mentioned. And this drives prices of these properties down. So you have like a two-tier market, whereas in the España interior, property prices are steadily falling because again, there's no demand because the young people, there's a mass exodus to the large cities, the better job opportunities. And then on the large cities, Spanish cities, you have a huge,

06:36huge price surge. Then you have all the coastal areas which are dominated by a foreign demand, driven, spearheaded mainly by British, Germans, and lately a surge of Dutch. And these property prices are also surging by two digits, 12-13% per year. So obviously from a foreign perspective, you really have to study well the market to know exactly where you're buying into because There's

07:05still opportunities to be found, granted, but you know, you have to know where to look for them. And there's also a change in the demand. Like when I started practising law 24 years ago, people again concentrated in what you're saying, the coastal areas, the southern and eastern coast, Valencia, Almería, Cádiz, Málaga, obviously the Canary Islands and Mallorca. But now

07:32with the climate change, because there is climate change, temperatures are going up steadily. We see a lot of interest in northern Spain, so there's a lot of client queries coming from Galicia, San Sebastián, País Vasco, because obviously, you know, clients look at these prices and say, hang on, you know, I can buy a very nice villa instead of paying, I don't know, €600,000 in southern Spain, I could just pay for €180,000 up north. And, you know,

08:00the summers there are 1, 1.5 months long, and the the weather's mild. So there's a lot of interest now in the north of Spain as well. So that's kind of like changing. So just on the pricing side of things, right, like we've talked about this two-tiered Spain, which I completely agree, la España vaciada, the coastal Spain, the cities, it's really a tale of two Spains, right? We've seen, you know, quite strong property price, you know, increases over the past,

08:26you know, few years sustained, right? Where do you see, you know, that you know, this time next year, where do you see prices heading? Like, as aggressive or growths which are as strong as recent years, or do you see this sort of stabilising a bit? Where do you see prices going?

08:45No, I think property prices will continue to go up steadily, but not as aggressively as we've seen over the last years. By today, it's like, for example, resales last year, Nationwide, they increased by an average of 13.7%, which I believe is just crazy.

09:03So, you know, you'd say that we've reached sort of a sign of sort of stabilisation point compared to recent years? I think the lack of supply in the property market is a hidden stabiliser, a property stabiliser regarding price-wise, because as the supply is in short demand, there's hardly any supply, that's what's going to keep prices steady So if anybody's expecting, such as last time in 2008

09:30property crash, property prices crashing by 40 or 50%, in my view, that is not going to happen. So it's true that we're not going to see dramatic property rise prices of 13 or 14% as of now, but I believe that prices are still going to go up by 5, 6, or 7% per year, definitely.

09:48We were just talking about, you know, the two-tiered Spain, right? And I've got an interesting fact here, right? Málaga average is around €4,500 per square metre. In markets like Marbella, it's more like €5,000 per square metre, right? And obviously it's the lifestyle buyers that, you know, that drive the price in these, you know, strong markets. While in Ciudad Real, under €800 per square metre. Isn't that incredible? Same country, just like two complete, you know, four times, three and a half times less.

10:14It is. I mean, I recently published an article in Idealista last month where I gave five examples of conveyances that we've been involved in, and also other colleagues of mine. And I gave the years in which the properties were bought and when they were sold, and there were some crazy cases. And this falls down to the government's misguided housing policy, which is driving prices continuously upwards, which is what I criticise in my articles. And I think personally that the

10:42market should cool off a bit because it's not normal for property prices to go up so sharply. So let's just one second talk about, you know, other driving factors. So we talk about, you know, population growth, We've talked about, you know, housing deficit and how little we build in Spain. We've talked about the two-tiered Spain, which is also important.

11:02What role do you think inflation has in a market like the Spanish housing market? Inflation would have an effect of cooling down the demand because with the rising inflation, obviously the central banks are forced to increase the interest rates, the price of money, which in turn impacts mortgage loans, which again appreciate, they become more expensive, which means in turn that people, lots of people cannot afford them any longer,

11:29which brings down demand. So higher inflation, as a matter of fact, has a positive effect in the way, by way of cooling down the market. And do you think there is a difference in the impact? I mean, for example, if you look at markets like Costa del Sol, where most of our buyers are international, Do you think inflation has the same impact in markets like these and other— what you're saying is more the domestic market. Am I right?