Will housing prices fall? Key factors in 2025.
The real estate market is experiencing a period of uncertainty. Many are wondering if housing prices will drop in 2025, especially those considering buying, investing in, or renovating a property in areas like Torrevieja or Orihuela Costa . In this article, we analyze the factors that will influence price developments, what experts are forecasting, and how to make informed decisions in the face of a changing landscape.
At OVA Studio , as an architectural firm with extensive experience in the area, we share an informed and realistic view of the current context and what may come.
What’s happening with housing prices?
In recent years, housing prices in Spain have maintained an upward trend, especially in coastal areas with high tourist and residential demand. However, the outlook could change starting in 2025 due to several macroeconomic and social factors.
In areas like Torrevieja, where there is a mix of domestic and foreign buyers, market behavior may differ from that of larger cities like Madrid or Barcelona. However, the following factors will have an impact across the entire region.
Factors that could cause prices to fall in 2025
Although housing prices remain stable in some markets, several factors could lead to downward adjustments in certain areas of Spain during 2025. First, a potential widespread economic crisis would directly affect buyers’ purchasing power, reducing demand and putting downward pressure on prices.
Another relevant element is the possible increase in the supply of public housing , which could balance the market in some regions, especially in urban areas where prices have remained high due to the lack of affordable alternatives.
The implementation of a specific tax on home purchases by foreigners is also being debated . If this measure is implemented, it could curb some international demand in certain areas, such as the Mediterranean coast, causing a slowdown in price increases and even localized declines.
Finally, in rural areas or in inland municipalities with low population density, where demand has fallen significantly in recent years, significant downward adjustments are expected , especially for older properties or those with limited commercial potential.
What could keep prices up or even raise them?
While many are wondering whether housing prices will drop , it’s important to keep in mind that there are factors that could sustain or even increase values in certain areas.
Factors influencing price increases: High demand for housing, Shortage of supply, falling interest rates, Real estate speculation, Inflation, Spain’s attractiveness to foreigners, shortage of building land, lack of skilled labor.
1. Foreign investment
Torrevieja and Orihuela Costa remain very attractive to buyers from countries such as the United Kingdom, Poland, Belgium, and Germany. Political stability, the climate, and prices (still competitive compared to other European countries) fuel solid demand, especially for mid- to high-end properties.
2. Revaluation due to renovations or energy efficiency
Renovated homes, with good interior design and energy certification, can maintain or increase their value compared to others that require updating. Here, the difference is made by professional work. If you’re thinking about renovating, you can read our guide on comprehensive renovations in Torrevieja.
3. Locations with constant demand
Areas close to the beach, with services and good connectivity, tend to withstand downturns better. Even with adjustments in the overall market, these locations remain attractive for living or investing.
What should you do if you’re thinking about buying, renovating, or investing?
Evaluate the type of housing
Not all properties will follow the same trend. Poorly located, poorly maintained, or inefficiently laid out homes will be more susceptible to potential price drops.
Don’t wait for “the best moment”
If you’re sure you need a home or want to invest long-term, the best time to buy is when the property suits your needs. Trying to predict the bottom of the market rarely works.
Improve before selling
If you already own a home and are thinking about selling, renovating it can help increase its value or sell it faster. Interior design, energy efficiency, and functionality are key factors in today’s purchasing decision.
Final Thought: Will Housing Prices Fall in 2025?
The answer depends on the type of property, the area, and the buyer’s personal situation. In general, prices are expected to continue rising; there is more demand for housing than there is supply of homes under construction. This, combined with a dwindling labor force and rising material prices, is driving up housing prices.
At OVA Studio , we can help you make informed decisions whether you’re considering building, renovating, or investing. Our knowledge of the local market and our experience in architecture and design projects are the foundation for creating spaces that increase in value over time.
If you’re thinking about renovating, building, or purchasing a home in the area, visit our architectural services section in Torrevieja or contact us for personalized advice.
