Bank of Spain Housing Market Report June 2026: Mild Overvaluation, No Lending Brake

The 12.7% rise in Spain's House Price Index in 2025 sits well above the 8.4% recorded in 2024 and the 4.0% in 2023. The 2025 figure is the strongest annual gain since 2007, the year before the previous market peak. Yet in real (inflation-adjusted) terms, prices remain roughly 15% below that 2008 peak after the cumulative 41% CPI inflation Spain has carried since then. The headline-versus-real gap is the point: nominal record highs, real prices that still have room.

The mortgage market shows the same picture. Spanish banks registered 501,073 residential mortgages in 2025, up 17.8% year-on-year, with €82 billion in total lending (up 32.6% YoY). Despite that surge, the non-performing loan ratio on residential mortgages stays around 2.9%, a fraction of the 13%+ readings during the 2008-2014 crisis. The BdE assessment: lending is strong but not stretched.

The overvaluation range is the headline metric. Spanish housing sits 1% to 9% above the level its long-run fundamentals (rent yields, income, mortgage rates, demographic demand) would justify. This is the lower-half of the BdE's "moderately overvalued" band and well below the 30%+ overvaluation that preceded the 2008 crash. The BdE Governor's deputy commented during the report's presentation that no macroprudential capital buffer increases or borrower-based measures (DTI caps, LTV caps) will be activated this cycle.

Why the BdE is not pulling the brake

Three reasons in plain language.

First, the supply side is broken in ways the BdE cannot fix. New housing starts are tracking around 140,000 units per year against an estimated annual demand of 250,000-300,000 units driven by migration, new household formation, and short-let conversion losses. The BdE expects starts to stabilise at 140,000, not climb. Demand pushes prices, not lax credit.

Second, the buyer mix is conservative. Spanish buyers in 2025 put down higher cash percentages than in 2007. Foreign buyers, who dominate Costa Blanca and Costa Cálida transactions, brought 60-75% cash to closing on average across our 2025 books. Loan-to-value ratios are well inside the regulatory comfort zone.

Third, the household debt service ratio sits near a multi-decade low, supported by the 12 to 18 months of relative wage growth since late 2024. The BdE sees no consumer over-leverage signal of the kind that defined the 2007 build-up.

For context on how 2025's surge looked on the ground for foreign buyers, our 2026 visa paths article covers the legal frameworks that funnelled the year's buyer flow.

What it means for buyers on our coast

The mid-cycle reading favours buyers who can act in the next six to nine months. Three specific takeaways:

• Mortgage availability stays open. Spanish banks (Caixabank, Sabadell, BBVA) are extending the same LTV bands to non-residents through 2026 that they offered in late 2025. Our non-resident mortgage guide tracks the current rate structure (3.2% to 3.8% fixed for 25-year terms is the baseline as of mid-June).
• Prices have lifted off the long-run trend but have not detached. The BdE's 1-9% overvaluation finding sits in the same band as Portugal, Netherlands, and Germany right now. This is not the 2007 build-up. Buyers waiting for a 2008-style correction will wait.
• Specific micro-markets diverge. Costa Blanca North (Calpe, Altea, Denia, Javea) prices rose around 9-12% in 2025 per the latest Idealista regional index. Costa Cálida (Los Alcázares, Pilar de la Horadada) rose closer to 14-16% from a lower base. Costa Almería entry prices are still the value play.

Concrete current stock at the Costa Cálida value end: WES-2230 - 2 bedroom apartment in Pilar de la Horadada, 68 m², €255,000 and WES-2462B - 2 bedroom apartment in Pilar de la Horadada, 73 m², €265,000. Both apartments sit inside the band the BdE singles out as still rationally priced.

What it means for current owners

Holding pays. The BdE's no-lending-brake stance reduces the risk of a 2008-style demand collapse, which is the single biggest threat to a coastal property's resale value. The 12.7% 2025 HPI gain shows the resale market is liquid, with our agency clearing 30-50 day average days-on-market for well-priced stock in Calpe, Altea, Denia and the Vega Baja in May and June 2026.

For owners considering rental income, the Supreme Court STS 620/2026 ruling on short-let registries continues to affect licence renewal economics. The annual property taxes guide for non-residents covers the 2026 IBI bands and the residency-status difference on rental income.

What to do now

If you have been waiting for a clearer market signal, the BdE Spring 2026 report is it. The conditions support a 2026 transaction more than they suggest waiting:

• Mortgage capacity intact. No lending caps coming this cycle.
• Real prices still below the 2008 peak. Long-run upside intact.
• Demand outpacing supply structurally. The 140,000 starts versus 250,000 demand gap is not closing in 2026 or 2027.
• Costa Cálida and Costa Almería remain the strongest value plays inside this picture.

Browse our 34 active Pilar de la Horadada sale listings under €300,000 for the largest pocket of stock sitting inside the BdE-defined fundamental price band. For Costa Blanca North apartments, the 20-strong Denia inventory under €400,000 holds the closest match to the report's mid-band thesis. Our foreigner's guide to buying property in Spain covers the closing process if you have not bought before.

Buyers from the Ukrainian community under temporary protection get a separate read on what the report means for their TPD-window purchase math. Russian-speaking buyers see specific guidance in our money transfer to Spain guide.

The next BdE Financial Stability Report drops in autumn 2026. We expect the same band, with HPI growth softening to 7-9% for the year as supply marginally improves and 2025's surge normalises.

By Oleg Fesechko, founder of Wesna Group.