2025 will be an unforgettable year for the residential sales market

• The report concludes that if the Spanish economy continues to grow above 2.5% and Eurozone inflation remains around 2% in the coming years, the residential market will experience a prolonged expansion phase.

• The analysis by Forcadell and the University of Barcelona (UB) rules out the emergence of a new real estate bubble.

• The presentation of the report for industry professionals will take place on the 7th, in an open-access and streaming format via YouTube.

Forcadell and the University of Barcelona presented the Real Estate Report – Today’s Market and Forecast 2024, in a press conference this morning. Among the main conclusions of this report is the forecast of an “unforgettable” 2025 for the residential sales market, a year in which 825,000 units are expected to be sold, a figure not reached since 2007 (836,871 transactions) nationwide.

According to the report, next year will be memorable due to factors such as the high pent-up demand (around 1 million households), rental scarcity, increased bank credit, lower mortgage interest rates, parental financial support for home purchases, and the rise in home acquisitions by foreigners.

These and other findings were highlighted in the presentation to the media conducted by Ivan Vaqué, CEO of Forcadell, and Dr. Gonzalo Bernardos, Associate Professor of Economics at UB and Director of the Master’s in Real Estate Advisory, Management, and Promotion at UB.

The 2024 Forcadell-UB report is divided into five chapters, covering the national and international economic outlook for 2024. It also delves into the prospects for property sales, rental, office, retail, and industrial/logistics markets in Spain. This edition also includes a section dedicated to short-term rental housing.

Main Findings of the FORCADELL – UB 2024 Report

RESIDENTIAL SALES MARKET

• In 2025, the residential sales market will experience a remarkable year. During this period, home sales are projected to reach 825,000 units, a figure not seen since 2007 (836,871 transactions).

• The market will set a record for used home sales next year (725,000 units), significantly higher than the previous all-time high (649,971 in 2022) and much higher than in 2006 (544,944).

• Sales prices are expected to rise over 10% in 2025, especially in the new housing segment, with increases exceeding 15% in many locations. In this segment, high demand and limited supply mean there will be nearly three buyers per available property. However, the number of newly started homes is unlikely to exceed 140,000 units.

• The residential market will experience a prolonged expansion if, in the coming years, the Spanish economy continues to grow above 2.5% and Eurozone inflation stabilizes around 2%.

• A “mortgage war” will emerge, making cheaper mortgages more accessible and significantly increasing bank credit, enabling numerous households to purchase homes. There will be an increase in loans exceeding 80% of the property price, as well as in families obtaining loans despite having to dedicate over 35% of their net income to repayments. From April onward, a large number of households will be able to access fixed-rate mortgages with an interest rate of 2% and mixed-rate loans with an initial rate of 1.5% for the first five years.

• A new real estate bubble is ruled out, as financial institutions will exercise greater risk control.

RESIDENTIAL RENTAL MARKET

• The rise in rental prices is unrelated to the growth of short-term rental housing (VUT). The supply of such housing has shown moderate growth in recent years, with the stock dedicated to tourism being limited. Additionally, rental prices have surged even in municipalities with low VUT presence. 

• Reducing VUT in Barcelona would not increase the supply of conventional rental properties. Between 2014 and 2024, during which there was a reduction in VUT due to a moratorium on new licenses (decreed in July 2015) and efforts to curb illegal VUT, rental prices in the city rose by 76.3%.

• If VUT were eliminated in Barcelona, most properties would likely be sold rather than rented conventionally due to the low profitability of rentals under current price controls, with investors shifting to other cities where VUT remains available.

• Rent controls and new regulations seeking to convert short-term leases into conventional rentals are misguided measures. In Catalonia, rental prices have increased both in existing contracts and in renewals between small landlords and tenants, as well as in properties managed by large landlords and those shifting from conventional rentals to seasonal leases.

• Rental prices have reached an all-time high in all 52 provincial capitals this year and continue to rise. Prices are expected to be even higher in almost all capitals in 2025, which will force many young people to settle for renting a room rather than an entire home. This will particularly affect immigrants and low-income households.

• There will be a surge in room rentals in major cities and the emergence of a black market in regions where price controls are imposed, given the lack of measures to increase the stock of social housing for rent and disincentives for purchasing properties for rental purposes.

COMMERCIAL MARKET

• The market for commercial assets will experience a strong rebound in 2025. Increased credit availability from financial institutions to improve margins will significantly boost buyers’ purchasing power, spurring transactions by enabling buyers and sellers to reach agreements on market prices.

• In the logistics warehouse market, Barcelona and Madrid show significant differences. Barcelona’s product shortage is more pronounced than Madrid’s, driving up both sale prices and rental rates in Catalonia. This price gap will continue to widen next year, as rising demand can only be partially met in Madrid’s surrounding areas, but hardly at all in those of Barcelona.

• The office market will see a positive net absorption of rental space, significantly higher than in the previous two years. The excess supply will begin to decline as demand grows, driven by improved funding for existing startups, the creation of more new companies, the return of some companies to near-full on-site work, and the expansion of others due to the excellent performance of the Spanish economy.

• In 2025, properties in Barcelona’s commercial center and near tourist hotspots will again be safe-haven assets. In these locations, for the first time since 2020, investors will leave behind losses caused by COVID-19, including decreased rental income and higher vacancy rates.