MADRID, June 18 (Reuters) – Spain’s housing market is expanding strongly, but without presenting the financial stability risks seen in past property booms, the Bank of Spain said in its 2025 annual report, even as prices, sales and mortgage lending continued to rise.
“In particular, the indicators that signal the existence of risks and vulnerabilities to financial stability associated with developments in the property market remain at contained levels,” it said on Thursday.
Spain has been struggling to balance promoting tourism, a key economic driver, with growing concerns over high rents and housing prices.
Affordability problems and short supply of new housing were also reducing homeownership and delaying young people leaving their parents’ homes, the bank said.
The central bank called for coordinated policy efforts by the central government, regional and municipal authorities to boost housing supply and reduce an estimated shortage of 750,000 homes.
Adjusted for inflation, prices rose at an annual rate of 9.7% in 2025 but in the first quarter remained 12.2% below the peak reached in 2007, before Spain’s real estate bubble burst.
Property sales topped 750,000 in 2025, near 2008 levels, but were lower relative to the population size, boosted by immigration in recent years.
About 52% of home purchases in Spain in 2025 were financed with mortgages but were below boom-era levels. New mortgage loans rose by 27.5% in 2025 at a time when the central bank is considering introducing limits to this type of credit.
Lower interest rates – down about 150 basis points since late 2023 – boosted mortgage growth, with fixed-rate loans making up around 80% of new lending.
(Reporting by JesĂşs Aguado; editing by Andrei Khalip)
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