Market Update 004 - May 2025
Navigating a Changing Landscape: Housing, Tourism, and Regulation
Dear Investors,
Please find our lates market update…
Market Snapshot: Rising Prices, Government Intervention
Spain’s housing market continues to experience significant pressure in May 2025. Home prices have surged by 44% since 2020, driven by limited supply, high demand, and the proliferation of short-term rentals. In response, the Spanish government has announced a €1.3 billion investment from EU funds to accelerate the industrialized construction of social housing, aiming to deliver 15,000 new homes annually and reduce construction times by up to 60%. Additionally, a proposal to impose a 100% tax on property purchases by non-EU buyers is under consideration. This measure targets foreign investors, particularly those acquiring high-end vacation properties, to curb speculation and address the housing affordability crisis.
Tourist Rental Crackdowns: Fines and License Reforms
Spanish authorities are intensifying efforts to regulate the short-term rental market. From June 1, 2025, all tourist rentals must be properly licensed. Staying in unlicensed properties could lead to last-minute cancellations or evictions. Hosts are required to collect personal information from guests, including passport details, to comply with new anti-fraud and public safety measures.
In the Balearic Islands, fines for operating illegal holiday rentals can reach up to €500,000. Moreover, new holiday rental flats within residential apartment buildings are banned, and stricter controls are being implemented to manage the number of visitors and their environmental impact.
Local Communities Reclaiming Control Over Tourist Licenses
Cities across Spain are reclaiming control over tourist licenses to address housing shortages and over-tourism. In Barcelona, the city council has pledged to eliminate all short-term rentals to tourists by 2029. Similarly, Malaga has introduced a three-year moratorium on new holiday rentals. Under new regulations, communities must vote with a supermajority—over 65% in favour—to approve new tourist licenses. This empowers residents to have a significant say in the development of their neighbourhoods and helps preserve the character of residential areas.
Tourist Behaviour Regulations: Fines and Restrictions
In addition to housing regulations, Spain is implementing measures to manage tourist behaviour. Starting June 1, 2025, pub crawls will be banned in Barcelona's Example district to reduce public disturbances. Public drinking is prohibited in hotspots like Barcelona, Madrid, and the Balearic Islands, with fines ranging from €100 to €3,000. Other new rules include bans on smoking and glass bottles on beaches, stricter noise regulations, and low-emission zones in areas like Soller in Mallorca.
Conclusion
Spain's property market is undergoing significant changes as the government and local authorities implement measures to address housing shortages, regulate the tourist rental market, and manage the impact of tourism on communities. Prospective buyers, investors, and tourists should stay informed about these developments to navigate the evolving landscape effectively.
Best regards,
The SPIB Team
Sources: