What’s driving the booming Costa del Sol property market?

With the population growing in the Costa del Sol by almost 150,000 in the past 10 years, it’s clear to see that the south coast of Spain is booming.

Places like Marbella, Mijas, and Estepona, in particular, have seen phenomenal growth in the last five years, with tens of thousands of new residents entering the real estate market.

Following a slight downturn in property sales throughout 2020 and 2021, because of the COVID-19 pandemic, both the Costa del Sol affordable housing and luxury property market have boomed in the last three years.

The experts at Bromley Estates Marbella have looked into the numbers to discover why there are so many foreign buyers coming into the Costa del Sol.

How is the housing market performing?

Following the end of the pandemic, the Costa del Sol has seen a huge increase in foreign demand and international investors. In 2022 alone, there were around 39,000 property sales.

In 2023, there was a slight dip after the initial post-COVID boom, but there were still more than 30,000 properties sold on the Costa del Sol property market.

Last year, in 2024, there were around 35,000 homes reported to be sold in the region, indicating a clear interest remains in the real estate market on the south coast of Spain.

Impact on the rental market

This real estate boom has also impacted the rental market in the Costa del Sol. An increase in property transactions has led to an enormous growth of short-term rental properties. According to Sur, short-term rentals have increased by a mammoth 466% since 2019 – indicating a clear demand that must be supplied.

This has led to new developments being built to attract buyers to both the luxury market and the affordable housing market.

Has this impacted property prices, though?

Have property prices in the Costa del Sol increased?

Yes, there have been steady increases in the average price of property across the Costa del Sol region.

The Malaga province recorded average price increases of 13% in 2024, which is hugely different compared to the Spanish national average of just 4.4%.

How have property valuations increased so much? Well, for a number of reasons. Factors like rising construction costs are needed to keep up the housing supply in line with both foreign buyers and locals.

With limited housing stock in some areas, it has contributed to a rise in house prices and building costs.

Reasons for the boom in residential demand in the Costa del Sol

There are several reasons why the Costa del Sol is such a popular location for both foreign property investors and locals. Let’s look through them.

Attractiveness of the Costa del Sol

Arguably, the biggest reason why the property market in the Costa del Sol has experienced a boom in recent years is the attractiveness of the region.

Whether you choose to live in a seaside town overlooking the Mediterranean Sea or live further inland close to world-class golf courses and mountainous walks, you’ll experience a lifestyle like no other.

Wonderful weather, an affordable cost of living, incredible food and drink, an interesting nightlife, and plenty of activities to do in your downtime make the Costa del Sol a desirable location.

Strong demand from foreign buyers

There is fantastic investment potential in the Costa del Sol, making international investors keen to seek a consistent rental income and capital appreciation.

For those retiring or looking for a second home in a sunny location, the Costa del Sol is hugely popular. UK expats have been purchasing retirement homes in Spain for decades, and the Costa del Sol region is an in-demand area because of the weather and lifestyle.

Also, the end of the COVID-19 pandemic led many people to reassess their priorities in life, with many wanting more space, better weather, and a more relaxed life. Costa del Sol ticks all of these boxes.

Spanish homebuyers

Spaniards are increasingly seeking ways to enter the property market in the Costa del Sol because of excellent work opportunities and an improved lifestyle. Younger buyers, especially, have shown a growing interest in the area because of better employment prospects and salaries and see the attractiveness of the region to escape the rental market in other areas of Spain.

Economic factors

Economically, the Costa del Sol offers plenty of benefits, such as the recent decreases in interest rates, which have made mortgages more affordable.

There is also a strong job market in the region with many large technological businesses exceedingly busy during the peak summer months.

Tourism

The Costa del Sol is a huge tourist attraction for holidaygoers and homebuyers. This ensures a high demand for holiday rental properties, which offer an attractive opportunity for investors, both foreign and Spanish nationals.

Speak to an expert real estate agency in the Costa del Sol

Are you ready to embark on a new adventure and purchase your dream home in the south of Spain?

At Bromley Estates Marbella, we’ve helped hundreds of people just like you find a property in the Costa del Sol, whether for a rental investment opportunity, a retirement home, or a second home abroad.

So, if you’d like to chat with a member of our team about anything you’ve read here – or if you’re interested in viewing and purchasing property in Spain – don’t hesitate to contact us immediately.You can do so by calling +34 952 939 460 (+44 208 068 7606) or by sending your enquiry to info@bromleyestatesmarbella.com.