Walter Finch
SPAIN’S two largest cities are being crushed under Spain’s unprecedented housing crisis.
Both Madrid and Barcelona recorded their highest-ever property prices for sales and rentals in May 2025, according to new data from property portal Idealista.
The situation has become so severe that Madrid has witnessed its steepest annual price increase since records began, with property values soaring 24.6% year-on-year to reach €5,573 sqm.
This represents a 54.4% increase compared to the peak prices during Spain’s previous property boom in 2006, when Madrid properties averaged €3,609 sqm.
Barcelona, whilst experiencing a more moderate but still substantial 10.8% annual increase, has reached €4,895 sqm for property sales.
However, the Catalan capital continues to hold the unwelcome distinction of having Spain’s most expensive rental market, with average monthly rents of €23.9 sqm compared to Madrid’s €21.7.
The rental crisis in Barcelona has been particularly acute, with prices rising consistently for 38 consecutive months since November 2021, all showing double-digit annual increases.
The implementation of Spain’s Housing Law, which designated Barcelona as a ‘stressed area’ with rent controls, appears to have paradoxically worsened the shortage of available rental properties rather than alleviating the crisis.
Madrid’s rental market has also seen dramatic increases, with rents climbing 11.7% annually in May, though this pales in comparison to the city’s record-breaking 17.9% rental increase recorded in June 2024.
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The capital’s property boom has been relentless, with 15 consecutive months of double-digit price increases since March 2024, matching a similar streak that occurred between 2018 and 2019.
Within Madrid, the crisis has affected all districts, with the upmarket Salamanca district leading at €9,687 sqm, followed by Chamberí at €8,099 sqm.
Even traditionally more affordable areas such as Usera and Carabanchel have seen annual increases exceeding 20%.
For rentals, 14 of Madrid’s districts are experiencing record prices, with Salamanca commanding €26.3 sqm monthly.
Barcelona’s situation mirrors Madrid’s geographical spread, with all ten districts experiencing varying degrees of price pressure.
The exclusive Eixample district leads rental prices at €26.6 sqm monthly, whilst even the more affordable Nou Barris district has reached record rental levels of €16.4 sqm.
The crisis appears to be creating a perfect storm of reduced supply and increased demand.
In Barcelona, the combination of tourism pressure, regulatory changes, and limited new construction has severely constrained the rental market.
Madrid’s situation reflects broader economic pressures, including population growth, employment opportunities, and speculation in the property market.
The crisis extends well beyond Spain’s two largest cities.
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Ten Spanish cities are simultaneously experiencing record-high prices for both property sales and rentals, including Valencia, which has surpassed €3,000 sqm for the first time, and tourist hotspots such as Palma, Málaga, and San Sebastián.
The Basque city of San Sebastián now holds the distinction of being Spain’s most expensive city for property purchases at €6,025 sqm.
Nationally, Spain’s used housing market recorded a 12.8% annual increase in May, reaching €2,391 sqm, the highest figure since Idealista began tracking prices.
This represents the largest annual price increase in the company’s historical data, surpassing even the notorious property boom of the mid-2000s.
Meanwhile, national rental prices have climbed to €14.5 sqm monthly, marking a 9.9% annual increase.
The geographical spread of the crisis is telling.
Cities such as Las Palmas de Gran Canaria, Alicante, Granada, and Santander have all joined the list of locations experiencing record prices, suggesting that the housing affordability crisis is no longer confined to traditional property hotspots but has spread throughout Spain’s urban centres.
For many Spaniards, particularly younger generations and those on moderate incomes, homeownership has become increasingly unattainable.
The situation has prompted calls for government intervention, though previous regulatory attempts, such as rent controls, have shown mixed results and in some cases may have exacerbated supply shortages.
The housing crisis represents one of Spain’s most pressing social and economic challenges, with implications extending far beyond property markets to affect mobility, family formation, and overall quality of life in the country’s major urban centres.
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