The question that comes back in every upswing: are we facing another bubble? After the 2008 one, the fear of a repeat is justified. But there are important differences between the current cycle and that one, and the technical indicators say different things from what appears in the headlines.
The key indicators compared with 2007
Property P/E ratio: In 2007, recouping the investment through rent (the price-to-earnings ratio applied to housing: the price divided by the annual rent) took 30-35 years. In 2026, the average P/E is between 20 and 25 years in big cities and 12-18 in medium-sized cities. There is pressure, but not at 2007 levels.
Price-to-income ratio: In 2007 it was equivalent to 9-10 years' salary. In 2026 it is 7-8 years in the big cities. High, but below the historical peak.
New building: In 2006 Spain was building 700,000-800,000 homes a year. In 2026, fewer than 120,000. The oversupply of those years doesn't exist today.
Mortgage lending: In 2006 it was growing at 20-25% a year. In 2026 growth is moderate and banks apply strict criteria (a 35% debt-to-income limit).
The verdict: bubble or not?
The technical data suggest that Spain in 2026 is not in a generalised bubble, although there are areas with significant overvaluation. The key difference from 2007: the current cycle is supported by solvent demand and a real shortage of supply, not by irresponsible lending and speculation.
Market data by area: Check the RadarPro analysis to see P/E ratios and yields by area before you invest.
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