FOR years, Spain’s housing market was heading in one direction, with strong demand, international buyers and a shortage of homes helping push prices even higher.

But now cracks are beginning to appear.

Around 10,000 fewer homes were sold across Spain during the first six months of 2026 compared with the same period last year – a fall of 2.6 per cent.

Mark Taylor, sales director at Al Nouri Group Real Estate, says: “The balance between prices and affordability is one of the key drivers behind the slowdown.”

READ MORE: Spain home sales returned to growth in June as almost 60,000 properties change hands – but remains weaker overall

Yet there is one big difference between what is happening in Spain and a traditional property downturn: While the sales are going down, the prices are still going up.

According to the Fotocasa Real Estate Index, the asking price of resale homes in Spain reached €3,133 per square metre in June 2026, up 4% in the second quarter and 17.2% year-on-year.

So, this paradox shows that Spain is not experiencing a property crash. But, the market appears to be entering a new phase in which high prices are colliding with affordability limits, causing transactions to slow before prices themselves begin to react.

Why are sales falling if demand is so strong?

One major reason is that Spain simply does not have enough homes available in the places where people want to buy.

New construction has failed to keep pace with the creation of new households. 

Also, a slow flow of building permits and delays caused by electricity grid congestion is holding back developments in some high-demand areas.

A BBVA Research expects that around 150,000 new construction permits to be issued in 2026, far short of the roughly 220,000 new households expected to be created during the year.

The supply of existing homes for sale is also tight, leaving buyers with fewer properties to choose from and making it harder for deals to be closed.

That means thousands of potential buyers are chasing a limited number of properties, helping push prices higher which ultimately leads to push some buyers out of the market.

At the same time, uncertainty surrounding Spain’s rental regulations appears to have cooled investment demand, with some landlords and would-be investors becoming more reluctant to buy properties for long-term rental.

Sellers may be asking too much

Another reason for sales coming down is that the houses on property portals are mostly overvaluated.

Selma De Oliveira, director of Selma Realty & Management, warns sellers against treating property portal prices as evidence of what their property is really worth.

“One thing is the announced price, and another very different thing is the real price recognised by the market,” she says.

Homes priced too aggressively can simply remain unsold.

“We can set a price, but it is the market that finally determines the value it is willing to recognise,” she says.

As sales are coming down, prices are going up and one reason for that is strong international demand.

Foreign buyers keep prices high

Spain has become a major destination for digital nomads and remote workers, attracted by its climate and lifestyle.

Since January 2023, 27,875 digital nomad residence permits have been issued, with family dependents making up almost half.

While wealthy international buyers can shop around even with prices way above the market price, many Spanish families and young people are finding themselves priced out altogether.

The situation is turning: Buyers are becoming much choosier

Estate agents say the days when foreign buyers would fly into Spain and impulsively purchase a holiday home during a long weekend are disappearing.

Arango García says she has seen the change first-hand.

“Buyers are no longer purchasing solely to own a second holiday home; instead, we are now seeing more families who want to live in the area,” she says.

“These buyers are more discerning and savvy. They take their time to make a decision and consider more details when investing, such as sustainability and energy efficiency in homes.”

De Oliveira has noticed the same trend.

She says buyers have become increasingly selective and are spending more time comparing properties before committing.

“Having significant financial means does not mean being willing to pay any price,” she says.

Mark Taylor believes the change could become more visible from 2027 as investors begin selling completed properties that they originally bought off-plan.

‘We are seeing the beginning of a broader change that will continue as completed off-plan properties are offloaded by investors from 2027 onwards,’ he says.

If large numbers of these homes come onto the market at roughly the same time, buyers will suddenly have more choice.

That would mean greater competition between sellers, less ability to demand ambitious prices and potentially slower price growth, or even falls in some areas.

Ultra-prime locations may remain insulated because genuinely exceptional properties are always in limited supply.

But elsewhere, the days when sellers could simply put a property on the market at an ambitious price and wait for a foreign buyer to arrive may be coming to a close.

For homeowners hoping to sell, De Oliveira says getting the price right from the beginning will become increasingly important.

A bright future for everyone

As De Oliveira puts it: “When someone buys here, they are buying a way of living. And, in some way, they are also buying happiness.”

The key to fulfilling that happiness is perhaps finding the right price: one that helps increase sales, keeps homes within reach of local buyers and, at the same time, keeps the door open to international buyers.

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