The rise in property prices in Spain: analysis and opportunities on the Costa Brava

The rise in property prices in Spain is making headlines in European economic news. In 2024, the Spanish market recorded a record increase of 11.2%, reaching an average price of €2,300 per square metre, a level not seen since the 2008 crisis. This spectacular surge is raising questions among British investors: is this a property bubble or a lasting trend? IMMO 365 Costa Brava, real estate experts in Roses, Empuriabrava, Platja d'Aro and Cadaqués, offer a detailed analysis of the causes of price increases in Spain and investment opportunities on the Costa Brava.

Understanding the rise in property prices in Spain

A record increase in 2024

The year 2024 will go down in history as the year with the highest increase in property prices in Spain in 20 years. With an average increase of 11.2%, the Spanish market is showing exceptional momentum, in contrast to the stagnation observed in other European countries such as France and Italy. The average price per square metre now stands at €2,300/m², a historic threshold that reflects the vitality of the sector.

This increase is not uniform across the country. Large cities and coastal areas have seen the most spectacular increases: Madrid (+20.2%), Valencia (+24%), Málaga (+21.5%) and Alicante (+18.2%). The Costa Brava, meanwhile, is enjoying more moderate but sustained growth, with increases of between 3% and 5% depending on the location, thus maintaining its attractiveness for French investors.

Forecasts for 2025 predict a continuation of this trend, albeit at a slightly slower pace. CaixaBank experts predict an increase of 4.5%, while CBRE forecasts 5.3%. This planned moderation offers an interesting window of opportunity for investors wishing to take advantage of the market before a potential new acceleration.

Property prices on the Costa Brava: controlled growth

Property prices on the Costa Brava are undergoing a particular evolution that deserves special attention. Unlike urban areas, which have seen explosive growth, the Costa Brava is maintaining balanced growth with average prices ranging from €2,500 to €4,500 per square metre depending on the location. This variation can be explained by the diversity of destinations: picturesque villages, lively seaside resorts and quiet residential areas each offer different opportunities.

In Roses, the average price is around £2,825 per square metre for flats and between £2,473 and £2,651 per square metre for houses, with a moderate increase of 2.7% for flats and 4.1% for houses over the last 12 months. Empuriabrava has slightly higher prices, around €2,988 per square metre for flats, justified by its unique character as the ‘Spanish Venice’ and the presence of properties with private moorings.

Gesvalt, a leading property valuation institute, forecasts a 7% to 9% increase for the Catalan regions, including the Costa Brava, if financing conditions remain stable. This projection positions the region as a dynamic but less speculative market than Madrid or Barcelona, offering an ideal balance between asset value and affordability for French investors.

The causes of price increases in Spain

Exploding demand versus limited supply

The primary cause of price increases in Spain is the fundamental imbalance between supply and demand. Spain faces an estimated deficit of more than one million homes, a shortage that exerts constant upward pressure on prices. The Bank of Spain even forecasts a shortfall of 600,000 new homes by 2025, further exacerbating this tense situation.

The supply of new housing remains dramatically insufficient despite a slight recovery in building permits. Several factors explain this weakness: the scarcity of building land in sought-after areas, a labour shortage in the construction sector and construction costs that have skyrocketed by 30% compared to 2019. Productivity in the construction sector has even fallen by 27.7% between 1995 and 2023, exacerbating the difficulties.

Faced with this limited supply, demand is exploding under the combined effect of several factors. The creation of around 400,000 jobs in 2024, wage growth above inflation, and migration flows are strongly supporting demand for housing. Spanish households also enjoy a healthy financial situation, with a debt-to-GDP ratio of 45.4%, below the eurozone average (52.4%), enabling them to invest in property.

Foreign investors: driving demand

Foreign investors play a crucial role in the rise in property prices in Spain. In 2024, they accounted for around 15% of acquisitions, concentrating their purchases in coastal and tourist areas. French buyers are among the three most prominent nationalities on the Spanish market, alongside the British and Germans.

This international demand can be explained by several attractive factors: an enviable Mediterranean lifestyle, an exceptional climate, a rich cultural heritage and prices that are still competitive compared to other European destinations. On the Costa Brava, the proximity to France (less than two hours from Perpignan) is a decisive advantage for British investors looking for an easily accessible second home.

The perception of Spanish property as a safe haven in an economic climate marked by geopolitical uncertainty is fuelling this enthusiasm. Local and international investors favour property as a secure investment, causing an increase in demand and, consequently, prices. This trend is expected to continue in 2025, with experts anticipating a 15% increase in total property investment in the country.

Lower interest rates: a market driver

The European Central Bank's monetary policy is one of the key factors driving up prices in Spain. After maintaining high interest rates to combat inflation, the ECB began a cycle of rate cuts in 2024. The average mortgage rate fell from 3.62% at the beginning of 2024 to around 2.87% at the beginning of 2025, a significant decrease that considerably improves access to credit.

This fall in rates has two major effects on the market. Firstly, it increases the purchasing power of buyers, who can borrow more for the same monthly payments. Second, it encourages current homeowners to refinance their existing loans, freeing up purchasing power that fuels demand. Spanish banks have launched a veritable ‘rate war’ to attract these customers, offering increasingly attractive financing terms.

CaixaBank estimates that the ECB's key interest rate could reach around 2% by the end of 2025, with four further cuts expected. This prospect is encouraging investors to act quickly, anticipating an increase in demand and therefore prices. For buyers on the Costa Brava, this window of opportunity allows them to secure favourable financing conditions before the expected acceleration of the market.

The tight rental market: additional pressure

The crisis in the Spanish rental market is an indirect but powerful cause of rising property prices in Spain. Rents have skyrocketed, with an average increase of 10% in 2024, reaching record levels in major cities: €19.5/m²/month in Barcelona and €18.2/m²/month in Madrid. This surge makes buying property more attractive than renting, prompting many tenants to become homeowners.

The rental supply is shrinking dramatically due to several factors. The new housing law, which came into force in 2023, has created mistrust among landlords, who are withdrawing their properties from the traditional rental market or converting them into tourist rentals. This transformation is exacerbating the shortage of housing available for long-term rental, reinforcing the appeal of buying for those who can afford it.

On the Costa Brava, this dynamic is expressed differently. The seasonal rental market remains very buoyant, with sustained tourist demand generating attractive returns of 5% to 8%. This high rental profitability attracts investors, increasing demand for purchases and contributing to rising prices. Properties located in Roses, Empuriabrava and Platja d'Aro are particularly benefiting from this trend.

Costa Brava: a balanced and attractive market

Competitive prices compared to urban areas

While Madrid and Barcelona have average prices exceeding €4,000 per square metre, the Costa Brava remains significantly more affordable. This price difference in no way reflects a difference in quality of life, quite the contrary. The region offers an exceptional setting combining Mediterranean beaches, protected natural parks, a rich cultural heritage and an ideal climate.

Roses, IMMO 365 Costa Brava's flagship destination, offers flats from £2,825 per square metre, around 30% less than Barcelona.

For the same budget as a small flat in the Catalan capital, an investor can purchase a spacious property with sea views in Roses. This relative affordability is a major competitive advantage in attracting French investors looking for the best value for money. Empuriabrava, with its unique canal town character and properties with private moorings, has prices around £2,988 per square metre.

These prices remain very competitive compared to other European seaside destinations offering similar amenities. The ‘Spanish Venice’ is particularly appealing to boating enthusiasts and investors looking for an unusual property with strong potential for appreciation.

Moderate and sustainable growth

The moderate growth in property prices on the Costa Brava, between 3% and 5% annually, has the advantage of sustainability. Unlike the spectacular increases seen in Madrid (+20%) or Valencia (+24%), which may raise fears of a sudden adjustment, the measured growth on the Costa Brava is part of a healthy and sustainable trend.

This moderation can be explained by several structural factors. The Costa Brava benefits from a mature market with a relatively diverse property offering, limiting speculative pressures. The region has a balanced mix of permanent residents, second home owners and seasonal tenants, creating stable demand rather than speculative peaks.

Local authorities also strive to preserve the authentic character of the region by controlling excessive urbanisation. This policy of controlled development protects the natural and architectural environment that gives the Costa Brava its charm, thus ensuring the long-term value of properties. For investors, this responsible approach provides insurance against the risks of overbuilding and devaluation.

Profitability and quality of life: the double advantage

Investing on the Costa Brava offers a unique double advantage: attractive rental returns and an exceptional quality of life. Gross rental yields reach 5% to 8% in the most sought-after areas such as Roses, Empuriabrava and Lloret de Mar, outperforming the French average (3-5%). This profitability is due to sustained tourist demand, with millions of visitors each year.

Beyond financial profitability, the Costa Brava offers an incomparable Mediterranean lifestyle. The exceptional climate with over 300 days of sunshine per year, golden sandy beaches and wild coves, the natural parks of Cap de Creus and Aiguamolls, the cultural heritage linked to Salvador Dalí, and Catalan gastronomy create a privileged environment in which to enjoy your second home.

For British investors, geographical proximity is a decisive advantage. Roses is less than two hours from the British border and benefits from excellent road, rail and air links via the airports of Girona and Barcelona. This accessibility makes it easy to enjoy your property on a regular basis and to supervise its rental management, a considerable advantage compared to more distant destinations.

Outlook for 2025-2026: anticipating to invest better

A continuation of the planned increase

Forecasts for 2025 and 2026 confirm the continued rise in property prices in Spain, albeit at a more moderate pace than in 2024. CaixaBank anticipates a 4.5% increase in 2025, while CBRE forecasts 5.3%. For the Costa Brava specifically, Gesvalt predicts a 7% increase.