From immigration to overseas capital: Who is actually pushing up housing costs in Spain? | Economy | EUROtoday

Housing in Spain continues to rise, which fuels the talk about who places stress on the sector. Last 12 months, home costs rose nearly 13%, in keeping with information printed this Friday by the National Institute of Statistics. It is an acceleration that requires going again to 2007 to seek out comparable information. But past the numbers, the way in which wherein households understand actual property dynamics has additionally modified. At the start of the 2000s, on the peak of the bubble, the reasons for the escalation of the market centered on simple credit score—mortgages that financed as much as 110% of the worth of the house—and the abundance of opaque cash. Today, nonetheless, many consumers take into account that the rise in quantities is a response to the rise in land costs and the emergence of overseas capital with nice buying energy. And certainly, at the moment, two out of each 10 homes are purchased by foreigners, however not all of them have excessive incomes.

This shift within the psychology of the market has been exactly documented by the economist José García Montalvo y Funcas, in two surveys carried out twenty years aside to investigate what motivates Spaniards to purchase housing and what they attribute to the rise in costs. The end result reveals a profound transformation within the social narrative surrounding the true property market. But it leaves the query of whether or not the impression of the houses is right or not.

On the eve of the monetary disaster, the system rested on home financial savings and nationwide credit score. The overseas purchaser was then a complementary actor. At the start of the century it barely carried out seven out of each hundred transactions on the free market. Two many years later, its weight has nearly tripled: immediately it exceeds 20% of operations, in keeping with statistics from the General Council of Notaries. And just below half, 8% of complete purchases, correspond to non-resident foreigners, who are likely to have larger buying energy.

But the change shouldn’t be solely quantitative. It can be qualitative. An necessary a part of overseas demand is concentrated in very particular segments: luxurious housing, actual property funding and central or coastal places the place the value per sq. meter strikes in a really completely different league from that of the common Spanish wage.

The distance is measured in euros. In 2024, resident Spaniards paid round 1,679 euros per sq. meter, whereas non-resident foreigners—typically unrelated to financial institution financing (a minimum of in Spain) and fewer delicate to the home cycle—paid nearly double that quantity. In 2025 the determine marked historic highs with figures exceeding 3,100 euros per sq. meter. When part of the demand can assume these costs with out monetary pressure, the market bar strikes.

It is advisable, nonetheless, to introduce nuances. Not each overseas purchaser responds to the identical profile. The resident foreigner purchases housing at costs similar to these of the nationwide purchaser. The hole seems particularly within the case of non-residents. In financial phrases, the distinction is obvious: whereas some are in search of a daily dwelling, others are shopping for property with an funding element.

This distinction has additionally filtered into family perceptions. If at first of the 2000s immigration was seen as a requirement issue that put average pressure in the marketplace, immediately its explanatory weight has decreased considerably. In the newest surveys, it seems among the many least highlighted causes of rising housing costs, very removed from the affect that residents attribute to overseas capital with excessive buying energy (on a price scale of 1 out of 5, they provide the primary 1.7 and the second 3.7 factors).

The interpretation, nonetheless, varies relying on the earnings degree. The center and higher courses are likely to level to worldwide capital as primarily chargeable for the stress on costs. On the opposite hand, amongst households with decrease buying energy the notion persists that resident immigration contributes to tightening the market.

There are additionally nuances amongst specialists. Leandro Escobar, professor of Economics at Comillas ICADE, insists that “the effective supply of housing, especially in locations where people want to live, is very inelastic and arrives late. Therefore, the expert adds, “any enhance in demand, whether or not home or worldwide, tends to be rapidly transferred to costs.”

Óscar Martínez, president of the Professional Association of Real Estate Experts (Apei), emphasizes that the impact of the foreign buyer with high purchasing power is concentrated in very specific areas and hardly explains the rise in prices in many inland cities, where this profile barely has a presence.

Economist Gonzalo Bernardos partly agrees with this diagnosis and highlights that the true growth in operations has occurred among foreigners residing in Spain. Notarial statistics partially support this idea: sales carried out by resident foreigners have increased strongly in the last two decades and in 2025 they already represented 11% of the total.

However, absolute figures help to better measure the phenomenon and the tension it generates in the market. Only in the first half of last year, resident foreigners bought some 43,300 homes, compared to almost 27,900 purchased by non-residents. The total operations in that period amounted to 369,418 sales and purchases, according to the Notaries.

The role of soil

The land, meanwhile, continues to occupy a central place in the perception of homes. Both twenty years ago and now, citizens agree that it is the main cause of the increase in housing prices. However, the data tells a more complex story. In nominal terms, the average price of urban land today is significantly lower than at the peak of the bubble. It has gone from around 261 euros per square meter in 2005 to around 169 euros at the end of 2024, according to the Ministry of Housing. That is, it is 35% cheaper.

For some economists, the technical explanation has to do with the way prices are formed in a market with rigid supply. In reality, the land does not determine the price of the house; rather the opposite happens. When construction is insufficient and demand grows strongly, buyers are willing to pay more for the final product. This pressure ends up being transferred to the value of the land in the areas with the greatest demand. The result is a mirage: citizens identify rising land prices as the cause of the problem when, in many cases, it is rather its consequence.

In this explanation the inelasticity of supply plays a very important role. Since not enough is built, households are willing to pay more for the final product, which drags up land valuations in areas with demand. And it generates a mirage of scarcity that citizens interpret as the origin of evil, when in reality it is the symptom of unbridled demand.

“The value of the land is obtained as a residual: it is what remains after subtracting, from the expected income from the sale of the home, the costs of construction, financing and taxes and an adequate profit margin for the developer,” explains Escobar. And he adds that “if the ultimate value rises as a result of demand exceeds provide – together with worldwide demand with excessive buying energy – the land captures a part of that rise. In apply, it isn’t the land that units the value of the house, however the dwelling that finally ends up setting the worth of the land.”

That doesn’t mean soil is irrelevant. Analysts recall that the national averages hide enormous territorial heterogeneity. In areas with the greatest population pressure, available final land is extremely scarce. Martínez explains that the increase in the cost of new construction also responds to additional factors such as the increase in the cost of materials, construction and the tax burden. In the case of used housing, he adds, prices have risen even more because supply is very limited in the face of growing demand.

The structural imbalance is evident. Spain creates about 230,000 new homes every year, but only finishes around 100,000 homes. This chronic supply deficit, added to the additional pressure from international buyers, has revived a fear that seemed buried after the financial crisis: being left out of the residential market.

According to Funcas, one of the main current reasons for buying a home is precisely the expectation that prices will continue to rise in the future. The difficulty of finding affordable rentals reinforces that perception. “The supply has been reduced so much that many citizens are forced to make an extraordinary effort to buy, because the mortgage payment ends up being cheaper than the rent,” explains Martínez.

In this context, buying a house stops being only a monetary resolution and turns into a safety technique in opposition to a market perceived as more and more inaccessible. And not like what occurred in 2005, when funding dominated the true property story, immediately the acquisition is more and more defined as a approach of securing a spot inside the residential system.