The rise in house prices in Spain shows no signs of slowing over the next four years.
According to forecasts by Standard & Poor’s Global Ratings, prices will increase by 9.1% in 2026, while in 2027–2028 Spain will become the European country with the highest growth rate – 7.4% and 6.2%, respectively.
Portugal will lead in 2026
In the current year, Portugal will be the leader, with growth of 10%.
S&P Global Ratings revised upward by 3% its forecast for price dynamics in Portugal, made in February this year.
As for Spain, the agency’s economists lowered their forecast by 0.2%.
The agency highlights the impact of the dynamic labour market on the housing market.
Strong job creation and wage growth have increased purchasing power and encouraged immigration, worsening the gap between supply and demand.
At the same time, administrative barriers in the construction sector are holding back the development of new housing.
House prices will rise across Europe
S&P expects house prices across Europe to rise by an average of 4% in 2026 and by more than 3% in 2027, outpacing household income growth.
The upward trend will continue until 2029 in all markets analysed by the rating agency.
The main thesis of the report is that this growth is driven by a shortage of new housing.
This situation persists because of a shortage of skilled labour, high construction costs, which remain significant after Russia’s invasion of Ukraine in 2022, complex urban planning procedures and the rapid growth of tourist rentals, which reduces the housing stock.
Government measures will not have an immediate effect
Several governments have already announced their plans: Germany – Bau-Turbo, France – Relance Logement, Spain – the 7 billion euro Plan Estatal de Vivienda, and Italy – Piano Casa.
However, S&P warns that the real effect of these measures will only become visible in several years.
At the same time, some measures, such as stimulating demand, could even increase upward pressure on prices.
S&P’s alternative scenario
The agency has also developed a more favourable alternative scenario, in which rapid disinflation and lower interest rates would lead to house price growth in Europe of 1.4% by 2028.
In this case, Germany and the United Kingdom would benefit the most because of their greater sensitivity to interest rates.
Meanwhile, Spain, Portugal and Ireland – markets experiencing structural tensions – would barely deviate from the baseline trajectory.
The agency forecasts that by 2029 the effects of energy price fluctuations will largely disappear.
Therefore, the milder scenario mainly reflects a temporary shift: house price growth takes place earlier, in 2027–2028, rather than accumulating until 2029.