New-build homes are scarce and at record prices while sales fall: what it means on the Costa del Sol

New-build homes in Spain reached an average price of €307,782 in the first quarter of 2026, an all-time high and 6% more than a year earlier, precisely while total sales fell by 12.7%. Demand is not the explanation: the issue is that there is barely any new product on the market. On the Costa del Sol, that shortage bites earlier and harder than in the rest of the country.

Why are new-build prices rising if fewer homes are selling?

Because what is falling is the number of transactions, not buyer appetite. Between January and March 2026, 163,322 home sales closed in Spain, 12.7% fewer than in the same quarter a year earlier. Of those, only 13,789 involved new-build homes: down 15.4%, and barely 8.5% of the entire market. When 91.5% of what sells is resale, new-build stops being a mass-market alternative and starts behaving like a niche product, with niche pricing.

The comparison with the previous cycle is stark. In 2008, new-build accounted for 59.1% of all home sales, around 333,000 units a year; in 2006 and 2007, more than 410,000 were sold annually. Today its share is seven times smaller. Over the past decade, resale sales have almost doubled while new-build has grown by only 39%.

How many new homes are being built, and how many are needed?

In 2025, close to 140,000 new homes were granted building permits in Spain, up from 128,000 the previous year. That is an improvement, but it falls well short: household formation points to demand of around 250,000 homes a year, and the accumulated shortfall is already close to 750,000 units. In other words, even while building more than in 2024, the gap keeps widening every year.

Broken down by region, the distribution of those 2025 permits says a lot about where development is actually happening:

• Andalusia: 33,500 permits, 6.5% more than the previous year and the highest of any Spanish region.
• Valencia region: 19,700 permits, a 47% jump.
• Madrid: 18,600 permits, essentially flat (−0.2%).
• Catalonia: 15,800 permits, down 6.6%.

Andalusia leading the table does not mean there is a surplus of supply. It means it is where the greatest effort is being made to answer demand that, along the coast, also includes international and second-home buyers, two profiles that never show up in household-formation statistics.

What do new-build homes cost in Malaga and on the Costa del Sol?

The average new-build price in the province of Malaga stood at €250,990 in the first quarter of 2026, below the Balearics (€708,111), Madrid (€455,094), Girona (€432,426) and Barcelona (€337,709). That provincial average, however, blends inland and coastal areas and hides what is happening on the shoreline: in towns such as Estepona or Fuengirola , new-build is marketed at between €6,000 and €9,000 per m², and Fuengirola already has developments above €10,000 per m² — figures at the very top of the national range.

To put those prices in context, these are the median asking values from our own Costa del Sol portfolio, covering both new-build and resale homes:

These are asking prices rather than deed prices, and they are refreshed every month in our Costa del Sol market report. The takeaway is clear: coastal new-build now sells above the overall median of its own municipality, and in some cases doubles the price per square metre of comparable resale stock.

Why does the Costa del Sol feel the shortage first?

Because of how small the local market is compared with the volume of buyers it attracts. In the 2025 national ranking of cities selling the most new-build homes, Malaga comes fourth with 1,038 units (21% fewer than the previous year) and Estepona seventh with 892, ahead of regional capitals such as Valencia. Estepona has fewer than 80,000 residents: the fact that it sits among Spain's ten biggest new-build markets shows how differently development on the Malaga coast behaves.

Land adds to that pressure. Along the coastal strip between Malaga and Estepona, shovel-ready land is limited, planning timelines are long, and construction costs have not returned to pre-pandemic levels. A developer who secures a licence knows the units will sell off-plan, so there is no incentive to shave prices: the fall in transactions is a supply story, not a demand one.

What should a buyer or investor do now?

• Do not read falling sales as falling prices. Transactions are down because there is less product available, not because the market is cooling.
• If you want coastal new-build, get in early. Developments in Estepona, Mijas or Fuengirola typically sell their best units before the structure is finished, and prices rise phase by phase during the sales period.
• Always benchmark against comparable resale. With gaps of €2,000-€4,000 per m² between new and existing homes in the same area, a well-planned renovation can be the more profitable route.
• Check the specification and the delivery timeline before you check the price. In a market with few alternatives, the risk has shifted from price to delay.
• Have your financing settled before reserving. Off-plan units are decided in days, and the seller will not wait.

Conclusion

The Spanish market is living an only apparent paradox: fewer sales alongside higher prices, because the underlying problem is not a lack of buyers but a lack of homes. With a 750,000-unit shortfall and annual output of 140,000 against the 250,000 needed, the shortage has years to run. In Malaga and on the Costa del Sol, where international demand piles onto domestic demand, that tension is already priced in.

If you are considering buying a new-build home on the Costa del Sol and want to know which developments actually have units available and at what price per square metre, get in touch: we work with live inventory across the whole province and can tell you whether new or resale makes more sense in your particular case.

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