Cabanillas Real Estate

Real Estate Market Trends 2025 in Costa del Sol

tendencias del mercado inmobiliario

The 2025 property market is shaping up to be a scenario full of challenges and opportunities, especially in Spain and the iconic Costa del Sol. Factors such as interest rates, inflation and legislative regulation will have a decisive impact on buying houses in Estepona, both for the supply and demand of housing.

Understanding these trends is crucial not only for investors but also for those searching for their ideal home—just like you. Here, we’ll break down everything you need to know to stay prepared and make the most of the dynamic real estate landscape ahead. Shall we begin our exploration?

Factors Influencing the Real Estate Market in 2025

Various factors may impact the real estate market in 2025, each with the potential to significantly affect both Spain and Europe. Below, we break down some of the most important ones:

Interest Rates

The rise in interest rates is one of the main concerns for real estate markets across the European Union (EU), particularly in Spain. The European Central Bank’s monetary policies aimed at controlling inflation make mortgages more expensive, reducing buyers’ purchasing power and impacting housing demand.

In Spain, rate hikes have already slowed home purchases, creating uncertainty among investors. This has led to a deceleration in property acquisitions, especially for first-time homebuyers. However, demand remains high in certain areas, such as the Costa del Sol.

Inflation and Purchasing Power

Although inflation remains moderate compared to the peaks of recent years, it continues to impact purchasing power in Spain. Rising construction costs, driven by higher material prices, also have an indirect effect on housing prices.

Across Europe, inflation affects both buyers and renters. As tenants’ purchasing power declines, demand may shift toward smaller or more affordable housing options.

Land Shortage

Another crucial factor influencing the real estate market is the scarcity of land. In Spain, this issue particularly affects major cities like Barcelona and Madrid. The limited availability of land for construction has driven prices up, making it harder for developers to meet growing demand.

Regulation and Legislation

Legislative changes, particularly in rental regulations such as price controls and restrictions on landlords, are impacting the profitability of real estate investments in Spain. In cities like Madrid, local authorities are implementing measures to curb excessive rent increases, which could affect the rental market.

Across Europe, more countries are expected to adopt similar regulations to address the housing crisis, especially in high-demand cities like Berlin and Amsterdam.

Impact of Global Economic Events

Last but not least, global economic events such as the war in Ukraine and trade tensions must be considered. These factors create economic uncertainty, which can weaken investor confidence and slow down foreign investments in Spain and Europe.

However, major cities—remaining attractive investment destinations—could sustain their momentum due to their stability and growing international demand.

Ultimately, when viewed as a whole, these factors shape a complex outlook for 2025, but also present opportunities within the real estate sector.

What to Expect for Real Estate Prices in 2025

In 2025, Real Estate prices in Spain are expected to see moderate growth, influenced by factors such as demand, supply, and government policies.

Below, we outline the expectations for residential and commercial property prices, as well as the areas that could experience the most significant changes.

Will Prices Rise or Fall?

According to BBVA Research forecasts, housing prices are expected to see a nominal increase of 4.7% in 2025. Meanwhile, Bankinter predicts a rise of over 5% for the same year. These estimates are based on strong demand, the recovery of foreign economies, and a limited supply of new housing.

Which Areas Will See the Most Changes?

The cities of Santander, Lugo, and Alicante stand out for their projected price increases in the first quarter of 2025. Santander leads with a 6.6% rise, followed by Lugo at 5.4% and Alicante at 4.9%.

When Are Housing Prices Expected to Drop?

While current forecasts indicate price increases in 2025, some experts suggest a potential decline could occur in 2026, depending on factors such as supply and demand, as well as monetary and fiscal policies. However, there is no clear consensus on a specific date for a possible price drop.

When Will the Real Estate Bubble Burst?

Currently, there are no clear signs of a real estate bubble in Spain. Many experts believe there are no indications of a bubble forming in 2025. However, it is important to monitor factors such as the imbalance between supply and demand, excessive price increases without economic justification, and access to credit, as these could impact the stability of the real estate market in the future.

Opportunities and Risks in the 2025 Real Estate Market

In the much-anticipated year 2025, the real estate market in Estepona and the Costa del Sol may present various opportunities and risks for investors. However, this is a common occurrence every year and not a new phenomenon. Below, we outline the key aspects you should consider:

Investment Opportunities

Among the main investment opportunities, the following stand out:

  • Sustained Growth in Estepona: This city has undergone significant urban transformation, with development projects enhancing its infrastructure and appeal. Initiatives from companies like AEDAS Homes highlight Estepona’s potential for controlled and sustainable growth.
  • Growing International Demand: The Costa del Sol remains an attractive destination for international buyers, particularly from the UK and other European countries. The demand for luxury properties and second homes continues on a positive trend, presenting highly profitable investment opportunities.
  • Sustainability Trends: There is an increasing preference for sustainable and energy-efficient properties. Investing in developments that incorporate green technologies and sustainable practices can offer competitive advantages and higher market demand.
  • Tourism Recovery: Lastly, the resurgence of the tourism sector in the Costa del Sol is driving demand for vacation rentals and commercial properties related to tourism, creating opportunities in the short-term rental market and the hospitality industry.

Risks to Consider

Unfortunately, not everything is perfect, and several risks must be taken into account when investing in the real estate sector in 2025:

  • Price Fluctuations: While a moderate price increase is expected, factors such as changes in demand, government policies, and global economic conditions could lead to unexpected variations in property values.
  • Legislative Changes: Recently, the Spanish government announced—although nothing is yet in progress—a potential 100% tax on home purchases by non-EU foreign non-residents. This does not mean the measure will be approved, but it aims to curb disproportionate housing price increases. However, foreign media have criticized it as “absurd” and “ineffective.”
  • Global Economic Instability: International economic events, such as financial crises or pandemics, can impact real estate market stability. Assessing the resilience of the local market and diversifying investments is crucial to mitigating these risks.

At Cabanillas Real Estate, We Understand the Real Estate Market Like No One Else!

In conclusion, the 2025 real estate market will be shaped by a combination of economic, legislative, and social factors. From the impact of interest rates and inflation to the growing international demand in regions like the Costa del Sol, each element will play a crucial role in the evolution of real estate prices and investment opportunities.

Estepona offers sustained growth and strong appeal for international buyers, making it one of the most promising areas in the Spanish market. Staying informed about these trends is essential for making the right decisions, and having the support of experts like Cabanillas Real Estate can make all the difference in the success of your investment.

Our office is located at Avda. España 90, Estepona, Málaga. Follow us on our official social media channels, including Facebook and Instagram. You can also reach us via WhatsApp at +34 667 155 033.

Ready to take the next step? Contact us today and discover the best real estate opportunities in Estepona and the Costa del Sol!

1 Comment

  • Peter Mac Farlene
    February 3, 2025 at 12:42 pm Reply

    Interesting, I will keep in touch with costa del sol real estate news with you guys. Thanks

Leave a Reply