Housing Markets Rebound in France and Spain

After two years of slowdown, housing markets in France and Spain rebounded in 2025, fueled by lower mortgage rates and strong buyer demand.

After a turbulent few years, 2025 marked a turning point for Europe’s housing sector. Both France and Spain saw a significant rebound in property prices and sales — a rare double upswing not seen since before the pandemic.

France: A Fragile but Confirmed Recovery

According to new data from INSEE and the French notaries, property prices in France rose by 1.1% year-on-year in the fourth quarter of 2025. It’s a modest increase, but symbolically important after two years of decline.

Apartments outperformed houses, up 1.5%, while house prices rose by 0.8%.
Provincial regions led the growth (+1.2%), driven by the Provence-Alpes-Côte d’Azur and Hauts-de-France regions.
In Île-de-France, the heart of the French property market, growth remained limited to +0.7%, with Paris apartments showing a 1.4% rise.

Sales volumes also surged, reaching 951,000 transactions in 2025 — about 12.5% higher than in 2024. This marks the strongest annual activity since 2021, suggesting renewed buyer confidence and easing credit conditions.

“It’s more of a normalization than a true boom,” note the Notaires de France — a steady rebound rather than a speculative upswing.

Spain: Record-Breaking Momentum Since 2007

Across the Pyrenees, Spain’s housing market has been on fire. The INE (Spanish Statistics Institute) reported 714,000 property transactions in 2025, up 11.5% year-on-year — the highest level since 2007.

Housing demand remains red-hot, particularly in major coastal and metropolitan areas like Madrid, Barcelona, and the Costa del Sol.

Existing homes made up 79% of all sales, hitting their best performance since 2006.
New builds surged by 16.1%, buoyed by strong domestic and foreign demand.
Prices rose sharply — up 16.2% year-on-year to an average of €2,639 per m².

Foreign buyers played a significant role, accounting for almost 14% of all sales (over 97,000 transactions). British, German, and Scandinavian investors remain particularly active in coastal regions, reinforcing Spain’s appeal as a lifestyle and investment destination.

Lower Mortgage Rates: The Common Catalyst

The turnaround in both countries was largely driven by falling interest rates, which eased financial pressure and boosted buyer confidence.

In France, the average mortgage rate dropped from 4.2% (Dec 2023) to 3.08% (Aug 2025), according to Crédit Logement/CSA.
This opened the door for first-time buyers who had been locked out by rising costs in 2023–2024.
In Spain, the fall in borrowing rates further fueled competition — but the rapid price rise has reignited affordability concerns.

Analysts at CaixaBank Research warn that Spanish property prices are increasing faster than household incomes, creating potential long-term pressure on housing accessibility.

What to Watch in 2026

The outlook remains cautiously optimistic but not without risk:

France could see a plateau as borrowing costs stabilize and supply issues persist.
Spain’s market may begin to cool if affordability and inflation limit purchasing power.
Demand from foreign buyers — especially retirees and digital nomads — is expected to stay strong in both nations, helping sustain regional markets.

In short, while France and Spain’s property markets are finally moving again, the pace of recovery — and its sustainability — will hinge on interest rates, income growth, and housing supply in 2026.