European Cities: Madrid Property Prices to Q4 2028

Key figures (as of October 2026)

What the Madrid index measures

Spain's official house price index covers sales of new and second-hand homes and aims to measure price changes for homes of constant characteristics. It is published each quarter for the country and for each autonomous community, but not for cities, so the Madrid region is the smallest official geography that covers the city. The newest quarter in each release is provisional and becomes final in the next release. For the city itself, the housing ministry's quarterly appraisal values give a price per square metre, but they are valuations, not an index of sale prices.

Growth is easing from a high level

The regional index rose 10.3% in the year to the fourth quarter of 2024 and 14.2% in the year to the fourth quarter of 2025. The annual rate has since eased to 13.6% and then 12.9%, though the index still rose 4.2% in the second quarter of 2026 alone. Second-hand homes rose faster than new ones: they were up 14.1% on a year earlier, against 5.6% for new homes. Every region of Spain had a positive annual rate.

In the city of Madrid, the appraisal value was 5,418.4 euros per square metre in the second quarter of 2026, slightly below the first quarter but 9.4% above a year earlier on the Centre's own calculation. Homes up to five years old were appraised at 6,205.3 euros per square metre.

Two-year changes since 2021

On the Centre's own calculation from the published index levels, the change in the regional index from one fourth quarter to the fourth quarter two years later was 9.6% (2021 to 2023), 15.2% (2022 to 2024) and 26.0% (2023 to 2025). Taking every quarter since 2021, two-year changes have ranged from 9.1% to 27.8%, the latter from the second quarter of 2024 to the second quarter of 2026.

Rents and yields

Tax records for 2024 show 310,601 rented dwellings in the city of Madrid, at an average rent of 1,012 euros a month, or 15.1 euros per square metre. Measured against the official reference value of those dwellings, the gross yield was 4.8%. Because it uses reference values rather than market prices, it is not directly comparable with the central bank's national measure based on market prices, which was 2.9% in the second quarter of 2026, down from 3.1% in 2025.

Credit, demand and policy

Spanish home mortgages in August 2026 carried an average rate of 3.08%, against 2.88% a year earlier, with an average loan of 181,285 euros, up 7.7%. Nationally the number of home mortgages rose 2.3% on a year earlier, but in the Madrid region it fell 5.8%. The euro area's central bank raised its deposit rate to 2.50% in September, saying financing conditions had tightened and energy prices kept rising, and held it on 29 October.

Demand has been supported by population growth. Spain's population has kept rising in 2026, and the Madrid region has grown with it.

On policy, buying property stopped qualifying for Spain's investment residence permit on 3 April 2025. No municipality in the Madrid region is declared a stressed housing market, so the national caps on new rents in such areas do not apply there. A five-year state housing plan worth 7 billion euros took effect in April 2026. One decree adopted on 6 October 2026, in force since 8 October, extends some expiring leases and caps annual rent rises on existing leases until the end of 2027. It and a second decree on lease renewals must be confirmed by 13 November or lapse. The national parliament has been dissolved for the 29 November election.

What forecasters expect

A major credit rating agency's July 2026 outlook expected national house prices to rise 9.1% in 2026, 7.4% in 2027 and 6.2% in 2028. Together, the 2027 and 2028 figures imply about 14.1% over two years on the Centre's own calculation. They are national figures for calendar years, not the Madrid regional index, but they point to slower growth than in 2025.

What it means

Madrid's regional prices have risen by more than half in five years and are still rising at more than 12% a year, but the pace is slowing as credit gets dearer and mortgage numbers in the region fall. The central case is continued growth at a lower rate than in 2025. The election and the fate of the October housing decrees add policy uncertainty, mainly for rents.

Scenarios: the change in the Madrid region house price index from Q4 2026 to Q4 2028

These probabilities are the Centre's analytical estimates, reasoned from the figures above. Because the bands are ordered, the forecast is scored with both the multi-category Brier score and the ranked probability score.

The variable is the nominal change in the official house price index for the Madrid autonomous community, general index for all dwellings, published quarterly by the national statistics office, from the fourth quarter of 2026 to the fourth quarter of 2028. If the statistics office publishes this two-year change directly, that figure is used. Otherwise the Centre computes it from the two index levels as published in the first release that contains the fourth quarter of 2028, normally in early March 2029. If the index has been rebased by then, both levels are taken on the same base from that release. Later revisions are ignored. The figure is read in percent, so a fall of 0.5% counts as -0.5%. A figure with more than one decimal place is rounded half up to one decimal place, once, before it is placed in a band, so 11.95% counts as 12.0%. A figure stated as "more than", "over", "about", "around", "nearly" or "almost" a number counts as that number. A figure reported as a range counts at its midpoint. The bands cover every possible value, and each edge falls in the higher band: exactly 4.0% falls in band 2, exactly 12.0% in band 3, exactly 20.0% in band 4 and exactly 28.0% in band 5. If no figure for the fourth quarter of 2028 is published by 30 June 2029, the forecast is withdrawn.

What to watch

1. Quarterly index: the Madrid region readings for the third and fourth quarters of 2026, which set the starting point for this forecast.
2. Mortgage rates and volumes: the average rate on new home mortgages and the number signed in the region.
3. Housing policy: the vote on the October housing decrees and the housing plans of the government formed after the 29 November election.
4. City prices: the appraisal value per square metre in the city of Madrid, which fell slightly in the second quarter of 2026.
5. Population: quarterly population growth in the region and nationally.

Figures as of late October 2026. Probabilities are analytical estimates by the Ghaf Centre for Studies & Research.