As we welcome 2025, as a real estate agent on the Costa del Sol, specialising in Costa del Sol property, we know that the question on all buyers’ and vendors’ minds, is what will property prices look like in 2025. The state of the market is a particularly hot topic this year, due to issues surrounding the shortage of affordable properties in Spain’s popular coastal resorts and the recently reported possible increase in tax to be levied on non-EU buyers.
We’ve reviewed information provided by a number of experts and analysts from banks, valuations companies and fellow real estate agencies, to put together a summary of how the market is expected to perform over the coming year and the influences driving the market.
The Costa del Sol property market is different to the rest of Spain, it is unique in the fact that it is a perennially popular hotspot for property investment amongst international buyers. The temperature, Mediterranean lifestyle, superb infrastructure and high standard of living, tempts expats, digital nomads, retirees and fellow Spaniards, all seeking their own slice of this rarefied lifestyle.
The volume of sales is slightly lower than in the previous year (Stats volume of sales in 2023 and 2024), yet prices continued to rise. Solvia, the agency owned by an investment fund primarily to sell repossessed properties, report that property across the Costa del Sol saw an average increase of 3 per cent, and suggest that this steady rate of growth will continue between 2.8 and 4 per cent throughout 2025.
The Costa del Sol is a unique market, there is no doubt that the demand for property amongst foreign investors is consistently high in Málaga province and specifically on the Costa del Sol.
Foreigners, particularly from colder climates, are attracted to this corner of the world, not only for the superb range of villas for sale in Marbella or golf resorts, but also the access to an unbeatable quality of life.
All year-round sunshine and the natural beauty of the region offer the opportunity to enjoy a healthy outdoor lifestyle (including world-class golf, excellent gastronomy, amenities, infrastructure and Blue Flag beaches). Easy access from most European hubs is also highly beneficial.
However, this is just a small part of the picture, there are many other factors that drive the price of Costa del Sol Property, including the economy (interest and inflation rates), social, political (including new measures that are being considered to address the lack of affordable properties available to local residents /buyers) and relationship between supply and demand.
In simple terms, demand is higher than supply and is expected to continue for the foreseeable future. The demand for housing in Spain is growing, especially on the Costa del Sol, where there is a consistently robust market amongst locals and foreign buyers. As an example, let’s compare the price of residential property in Marbella; in October 2024, the average price was 5,371€€/m², representing an 13.53% increase compared with December 2023’s price of 4,731€/m² (figures provided by indomio.io).
The local market is gaining momentum due to the improved state of the economy (GDP growth and controlled inflation), higher employment rates, lower interest rates (including the Euribor), giving more potential buyers access to credit. With regards to foreign buyers, there is continuing growth in the expat population and global economies are also performing better and benefiting from lower interest rates, which together point towards continued high demand and increases in property prices throughout 2025.
The recent global cost of living crisis and high interest rate had minimal effect on the Costa del Sol property market, due to the increasing numbers of wealthy international buyers. Around 40% of all property transactions on the Costa del Sol in 2024 were cash sales and 33.5 per cent of all purchases in the province were by foreigners (APCE – Association of Developers and Builders of Spain).
A BBVA Research report suggests that house prices will continue to rise in many areas due to an acute lack of supply. The dwindling stock of new developments is attributed to a simple fact that there is not enough available land to build upon in the popular areas on the Costa del Sol. In addition, there are concerns regarding new regulations and to make the situation even more contentious, the industry is also experiencing a shortage of labour. BBVA’s economists predict that property prices will experience a nominal 4.7 per cent rise, which equates to a real term increase of approx. 0.7 and 1.6 per cent respectively (excluding inflation).
Throughout 2024, the lack of supply of long-term rental properties available to the local population has been a hot topic. As a result, major cities, like Barcelona, are planning to introduce regulations that will directly affect housing stock, prices and the use of the properties. Whether these types of measures will be implemented on the Costa de Sol is yet unknown.
Here on the Costa del Sol, the authorities are instead looking at ways to improve transport links. Both the POTA (Plan de Ordenación del Territorio de Andalucía, responsible for territorial planning) and POTSCO (Plan de Ordenación del Territorio de la Costa del Sol Occidental, responsible specifically for planning affecting entire western Costa del Sol) are looking at ways to improve transport links and flow between densely populated urban areas.
The most important options currently being explored are the extension of the railway along the coast and the possibility of creating a third main arterial road that will give priority to public transport. There is also a third element being explored which will take into account the future requirements of all of Málaga’s municipalities.
In addition, Marbella is currently developing a new General Municipal Development Plan (PGOM), which includes a new road map, more flexibility of use for rustic land. The original document drawn up in 2024 suggested an increase of almost 13 million square metres of new urban land. These initiatives would attract greater investment and higher demand for property.
Costa del Sol properties prices will continue their upward trajectory throughout 2025, due to the perfect storm of conditions outlined above, with specific reference to the imbalance between supply and demand. Even the recent announcements to implement a punitive 100 per cent tax on property purchased by non-EU buyers will not address dampen demand, as there will continue to be a never-ending supply of EU nationals who will be enticed to relocate or to purchase a holiday home.
If you would like more information about Costa del Sol property, we can help you find any type of home, from luxury villas for sale in Marbella, to golf apartments and a wide range of new build developments on the Costa del Sol. Contact Birgitte at [email protected] or call +34 683 391 512
