Property experts predict prices will rise in Malaga and along the Costa del Sol this year.
There is a broad consensus that property prices in Malaga and along Spain’s Costa del Sol will rise in 2025, though opinions vary on the extent of the increase. In 2024, Malaga ranked as the second most expensive province in Spain for house prices, seeing a 13% increase, according to property valuation firm Tinsa by Accumin. This is significantly higher than the national average of 4.4%. Only Soria experienced a greater rise, with an increase of 15.3%. Another real estate valuation firm, Gesvalt, reported an even higher increase of 5.6% for Malaga’s property prices last year. As 2025 progresses, the key question is how property values will evolve, given the substantial rise in prices in recent years and the growing social discontent over the challenges of entering the property market.
Regarding the wider province, Patricio Palomar predicts that price increases may be more pronounced in areas surrounding Malaga city. As the city becomes increasingly unaffordable with limited supply, people are moving west toward Torremolinos, Benalmádena, and Mijas, or east to Rincón de la Victoria. He also forecasts more urban development in Cártama, which he believes will emerge as a key residential area.
In the more tourism-focused areas of the Costa del Sol, Palomar anticipates a stabilisation of property prices in Marbella. However, he predicts stronger price increases for areas such as Manilva and parts of Estepona, where price rises could exceed 7%. Carlos Smerdou, CEO of Foro Consultores, attributes the rise in Malaga’s property prices to a mismatch between supply and demand. The city attracts people from all over Spain, and construction costs in the province have risen sharply, driven by increased development activity and a shortage of workers. This has caused some developers to pause sales until they can determine building costs, with many proceeding cautiously.
Both rising construction costs and strong housing demand, further fueled by falling interest rates, are expected to drive price increases in both Malaga city and the broader province. Areas experiencing population displacement will see even more significant rises, as housing in parts of Malaga city becomes increasingly out of reach for many. Smerdou suggests that, despite recent strong price increases, prices could rise by as much as 10% in 2025, which could mean a €40,000 increase on properties worth €400,000. This would exclude many potential buyers from the market, though Smerdou believes that housing demand will persist.
Smerdou identifies two key factors contributing to this: first, more than half of homes are bought with cash, and second, there is a lack of awareness of alternative investment options, which leads many to invest in real estate. “The housing market is red-hot,” says Gonzalo Bernardos, an economics professor at the University of Barcelona and real estate expert. Bernardos predicts a 12% increase in current property prices and a 15% rise for new builds, with growing demand driven largely by the middle and lower-middle classes, particularly those under 40. He believes that many young people will seek to leave the rental market by purchasing homes with the help of their parents. As the supply of new homes will not meet the demand, buyers will turn to the second-hand market.
Bernardos also argues that the younger generation now enjoys better quality employment, higher salaries, and greater stability, coupled with lower interest rates. He notes that many financial institutions are offering mortgages of 80% or more, which is likely to drive the housing market. He forecasts a 35% increase in credit granted by banks and a 25% rise in the number of mortgages taken out. Despite economic challenges in markets like France and Germany, Bernardos does not foresee these affecting property demand in Malaga, as foreigners will continue purchasing homes there. He maintains that the primary driver of this real estate boom is young people escaping the rental market.
José Antonio Pérez, professor of Real Estate Ecosystem at the Real Estate Business School (REBS) in Malaga, highlights the region’s shortage of housing supply, which is compounded by strong demand from residents, workers, tourists, and the luxury market. He stresses the need to reactivate housing supply, including new developments, property rehabilitation, and the mobilization of available land, especially public land, for affordable housing.
The latest forecasts from the REBS “Pulsimeter” report, which includes input from Pérez, estimate that nearly 8,000 new homes will be completed in the province in 2025, a 10% increase compared to 2024. New home sales are expected to rise by 18.5% to around 10,200, while second-hand housing transactions are expected to drop by 20%, leaving total transactions roughly unchanged at around 18,225. Despite these differing trends, the report predicts price increases for both new and second-hand properties. New home prices are expected to rise by 18.7%, reaching an average value of €535,770, up from just over €450,000 the previous year.
The average mortgage in Malaga is expected to increase by 2.4%, reaching over €228,000. Across Spain, the average mortgage loan is projected to rise by 4.7%, bringing the average value to around €150,500. Nationally, new and second-hand property prices are expected to increase by around 3.5%, with the average price of new homes in Spain reaching €286,600 by the end of 2025, and the average price of second-hand homes nearing €185,000.
Cristina Arias, director of the research department at Tinsa by Accumin, notes that 2024 saw new factors that bolstered residential demand, including falling interest rates, reduced mortgage costs, and improved access to credit. She attributes this sustained demand to factors like resilient employment, recovering household purchasing power, and rising immigration and foreign purchases. Lower interest rates have helped mobilize this demand.
Looking ahead to 2025, Arias believes that continued rate cuts by the European Central Bank, along with stable employment and improved consumer confidence, will maintain strong demand and encourage investment in housing. However, she also points out potential factors that could moderate the growth of prices and demand, such as the already high sales levels and a short-term shortage of housing supply in the most sought-after areas, which could make homes unaffordable for many. Additionally, the rise in demand for tourist housing and foreign buyers is likely to push prices even higher, with the average household in Malaga now dedicating 58% of its disposable income to housing costs, and 74% in Marbella. These levels reflect the significant difficulty for locals to enter the market, as foreign buyers and tourists dominate.
In summary, while 2025 is expected to see continued price increases in Malaga and the Costa del Sol, the market’s future will depend on how these competing factors—rising demand, low supply, and affordability issues—play out.
OUR SUMMARY BY JASON CALLOW HOMES –
Property prices in Malaga and along the Costa del Sol are expected to rise in 2025, though opinions differ on the extent. Malaga saw a 13% increase in property prices in 2024, well above the national average of 4.4%. Price hikes are expected to be more significant in areas surrounding Malaga city due to limited supply and rising demand. The Costa del Sol’s holiday areas, including Marbella, are expected to stabilize, while areas like Manilva and Estepona could see price increases above 7%. Factors contributing to the price rise include rising construction costs, strong demand, and falling interest rates.
Experts predict a 10% increase in Malaga’s property prices in 2025, driven by local and foreign demand, particularly from younger buyers seeking to escape the rental market. The average mortgage in Malaga is expected to rise, and new housing sales are predicted to increase by 18.5%. However, second-hand housing transactions may fall by 20%. The shortage of housing supply, especially in high-demand areas, could limit affordability for locals, with foreign buyers driving much of the demand.
Overall, 2025 is expected to continue the trend of rising property prices, but affordability challenges remain a key concern.
OUR ADVICE –
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