Madrid and Barcelona, two giant cities in Spain gripped by the housing crisis

Spain’s housing crisis has engulfed the two largest cities in Spain.

New data from the property portal Idealista shows that both Madrid and Barcelona saw their highest-ever sales and rental prices in May 2025.

The situation has become so severe that Madrid has witnessed its steepest annual price increase since records began, with property values soaring 24.6% year-on-year to reach €5,573 sqm. 

This represents a 54.4% increase compared to the peak prices during Spain’s previous property boom in 2006, when Madrid properties averaged €3,609 sqm.

Barcelona, whilst experiencing a more moderate but still substantial 10.8% annual increase, has reached €4,895 sqm for property sales. 

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However, the Catalan capital continues to hold the unwelcome distinction of having Spain’s most expensive rental market, with average monthly rents of €23.9 sqm compared to Madrid’s €21.7.

Rents in Barcelona have been rising steadily for 38 months, since November 2021. All of these increases are double-digits. 

The implementation of Spain’s Housing Law, which designated Barcelona as a ‘stressed area’ with rent controls, appears to have paradoxically worsened the shortage of available rental properties rather than alleviating the crisis.

Madrid’s rental market also saw dramatic increases in May. Rents rose 11.7% per year, but this is still a small increase compared to the 17.9% rental rise recorded by the city in June 2024.

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Since March 2024 the capital has experienced a property boom that is unstoppable, with a streak of 15 consecutive double-digit increases in prices. This matches a similar trend between 2018 and 2019.

Within Madrid, the crisis has affected all districts, with the upmarket Salamanca district leading at €9,687 sqm, followed by Chamberí at €8,099 sqm. 

Even in areas which were traditionally cheaper, like Usera and Carabanchel the annual growth rate has exceeded 20%. 

For rentals, 14 of Madrid’s districts are experiencing record prices, with Salamanca commanding €26.3 sqm monthly.

Barcelona’s situation reflects Madrid’s geographical distribution, with each of the ten districts facing varying levels of pressure on prices. 

The exclusive Eixample district leads rental prices at €26.6 sqm monthly, whilst even the more affordable Nou Barris district has reached record rental levels of €16.4 sqm.

The crisis is creating a perfect hurricane of increased demand and reduced supply. 

The rental market in Barcelona has been severely affected by the tourism pressure, regulatory changes and limited new construction. 

Madrid’s economic situation reflects wider economic pressures including population growth and employment opportunities as well as speculation in the property markets.

The crisis is not limited to Spain’s two biggest cities. 

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Ten Spanish cities are simultaneously experiencing record-high prices for both property sales and rentals, including Valencia, which has surpassed €3,000 sqm for the first time, and tourist hotspots such as Palma, Málaga, and San Sebastián. 

The Basque city of San Sebastián now holds the distinction of being Spain’s most expensive city for property purchases at €6,025 sqm.

Nationally, Spain’s used housing market recorded a 12.8% annual increase in May, reaching €2,391 sqm, the highest figure since Idealista began tracking prices. 

The price increases are the highest ever recorded in the company’s history, exceeding even the notorious housing boom of the early 2000s. 

Meanwhile, national rental prices have climbed to €14.5 sqm monthly, marking a 9.9% annual increase.

The geographic spread of the crisis tells a lot. 

Las Palmas de Gran Canaria and Alicante have joined the list of cities experiencing record prices. This suggests that the housing affordability problem is not confined to the traditional hotspots, but has spread across Spain’s urban centers.

Homeownership is becoming increasingly difficult to achieve for many Spaniards. This is especially true for younger generations or those with moderate incomes. 

Despite the fact that previous attempts to regulate, like rent control, had mixed results, and may even have worsened supply shortages in some cases, this situation has led to calls for government intervention.

The housing crisis is one the most pressing social and economical challenges facing Spain. It affects more than just property markets, but also mobility, family formation, as well as overall quality of living in Spain’s largest urban centers.