Madrid’s real estate market is heating up and once again finding itself in the international spotlight. According to the latest UBS Global Real Estate Bubble Index 2025, the Spanish capital has registered the largest increase in housing prices globally, with a 14% year-on-year rise, placing it among the world’s cities with the most strained residential markets. The study, prepared by the Swiss bank UBS, analyzes price trends and the risk of a real estate bubble in 21 major cities worldwide, and warns that Madrid is bucking the global cooling trend seen in most international markets.

According to the report, while housing prices in most world capitals remain stable after three years of moderate correction following the 2020-2022 boom, Madrid stands out as the most dynamic market in Western Europe, with a growth rate twice that of other major cities on the continent. UBS places the Spanish capital at a moderate but rising risk level, entering the top ten cities that could be approaching a new housing bubble if the trend continues.

The report indicates that the highest risk of a housing bubble worldwide is concentrated in Miami, followed by other cities such as Tokyo, Zurich, Los Angeles, Geneva, Amsterdam, and Dubai, where the price increase has been equally significant. Singapore, Sydney, Vancouver, and Toronto are at a second level of moderate risk, while London, Paris, and Milan present a low risk, along with Hong Kong, New York, San Francisco, and São Paulo, the latter considered the city with the least exposure among the 21 analyzed.

UBS emphasizes that Madrid’s case is particularly striking because it combines strong growth in the housing market with a simultaneous rebound in the rental market, which has also experienced a real increase of 10% in the last year. This dual effect, according to the report, stems from two key factors: the strong growth in new households in the capital and the insufficient pace of new construction, which is failing to meet existing demand.

Analysts warn that this structural shortage of supply is putting pressure on both purchase and rental prices, generating increasing tension that could lead to an overheated market. Real estate developers agree that long urban planning timelines and a lack of developable land remain the main obstacles to new housing development in Madrid, a situation that exacerbates the gap between supply and demand.

The report also highlights the influence of foreign investment on rising housing prices in the capital. The influx of international capital, especially in the luxury and prime real estate segments, has been decisive in recent years. However, UBS points out that the end of the Golden Visa—the program that allowed individuals to obtain residency in Spain through property purchase—could slow the flow of investment in the short term. This measure, eliminated by the Spanish government in 2024, particularly affects the high-end market, traditionally driven by non-EU buyers.

Added to this is the tightening of rental regulations, with new rules that limit prices and increase pressure on landlords and investors. According to the study, these policies, while intended to protect access to housing, can have the opposite effect if they are not accompanied by an increase in supply. The report’s author, Maciej Skoczek, warns that “stricter regulations, such as new taxes or price controls, have reduced the attractiveness of previously highly sought-after markets like Vancouver, Sydney, Amsterdam, Paris, New York, Singapore, and London, without managing to stem the pressure when supply remains insufficient.”

In the case of Madrid, the upward trend seems unstoppable. Prices continue to rise at a rate exceeding 10% annually, rents are skyrocketing, and supply is still not keeping pace. While other international capitals are experiencing a period of stabilization or even correction, the Spanish city stands out as one of the hottest residential markets in the world. UBS warns that if this situation persists and policies to boost construction and expand the housing supply are not implemented, Madrid could enter a new phase of the real estate bubble in the coming years.