Spain has just reached record population levels, approaching 49 million inhabitants, while the housing stock is growing much less than necessary. The combination of rising demographics, insufficient new construction and strong tourist pressure places Malaga and the Costa del Sol as one of the most stressed areas of the property market.

According to the latest data from the INE, the country has a larger population than ever before, but with a clearly ageing structure and a relatively small young base, although very large in absolute terms. It is precisely this young cohort, together with internal and international migration flows, that is fuelling a demand for housing that supply is unable to absorb.

Spain: more inhabitants, fewer young people in proportion and smaller households

Spain has exceeded 48.5 million inhabitants and is approaching 49 million, with growth supported almost exclusively by the foreign-born population. The population pyramid shows three similar cohorts between the ages of 15 and 29, but the relative weight of young people in the total population is lower than it was decades ago.

In the 18-25 age range, there are an estimated 4.2 million people, close to 9% of the population. These are the people who are now beginning to leave home and will be forming households over the next 10 to 15 years. The problem is that they are reaching this stage of life with tight salaries, skyrocketing rents and more demanding access to mortgage financing.

At the same time, the number of households is growing faster than the population for two reasons: more single-person households and smaller average family sizes. The result: more housing is needed to accommodate virtually the same population, which puts pressure on the market even without significant demographic growth.

Andalusia and Malaga: the demographic engine of the south

Andalusia has a population of almost 8.6 million, accounting for around 18% of the Spanish population. Within the region, Malaga has become the great demographic engine:

The province has a population of over 1.77 million.

It is one of the fastest growing in Spain.

And, according to the INE’s household projections, it will be the province with the largest increase in the number of households in the coming decades.

Translated into housing, the sector has come up with a rough figure: Malaga would need around 12,000 new homes per year just to keep pace with the creation of new households. Today, it is well below that rate. The result is a deficit that accumulates year after year.

The Malaga-Estepona strip: two-thirds of the province on the coast

Most of Malaga’s population is concentrated between Rincón de la Victoria and Estepona. Municipalities such as Malaga, Torremolinos, Benalmádena, Fuengirola, Mijas, Marbella and Estepona together have a population of well over 1.2 million.

This means that approximately two-thirds of the entire population of the province lives on the coastal strip, making this area the true laboratory of the Andalusian property market:

Málaga city has a population of around 600,000.

Marbella has a population of around 160,000.

Benalmádena, Fuengirola, Mijas and Estepona each have around or exceed 75,000-90,000 inhabitants.

From an age structure perspective, these municipalities have an average age of around 41–43, with a growing proportion of 35–59-year-olds and significant percentages of under-20s. In other words, a mix of young families, a working population in the midst of consolidation and a growing base of Spanish and foreign retirees.

Young people aged 18–25 on the Costa del Sol: latent demand

If we extrapolate the weight of the 18–25 age group to the Malaga coast, the Malaga–Estepona axis could have between 100,000 and 120,000 young people in this age group. Not all of them will leave home in the short term, but a significant proportion will.

Based on conservative estimates:

If 30–40% of these young people decide to become independent in the next decade,

and if these new young households comprise an average of 1.5–2 people (couples without children, shared flats), we would be talking about some 20,000 new young households in 10 years, just on the coast, derived from the current 18–25 age group.

And that’s not counting the arrival of young people from other provinces or other countries, attracted by the climate, employment in services and the digitalisation of work.

Households on the rise, new construction on the decline

Data on households and housing production paint an increasingly clear picture:

At the national level, various sectoral analyses point to an annual deficit of more than 130,000 homes in 2024, as more households are formed than homes are completed.

In Malaga, the creation of households clearly exceeds the delivery of new housing: the deficit is estimated at close to 6,000 homes in a single recent year.

If this trend continues, the cumulative deficit in the province could reach 50,000-60,000 homes in a decade. Much of this gap is concentrated in coastal municipalities, where real demand intersects with another very different demand: tourism and investment.

Prices and rents: Malaga skyrockets

While supply falls short, prices are rising. According to the main real estate portals:

The sale price in Malaga and the Costa del Sol has seen double-digit year-on-year increases in several recent quarters.

There are areas where the average price comfortably exceeds €3,500 per square metre.

In terms of rentals, Malaga is the most expensive province in Andalusia and among the most expensive in Spain, with average rents of around €15 per square metre and even higher in prime areas.

The luxury segment follows a different script: international demand sustains high prices, in many cases above €4,000/m², with a clear focus on villas and high-end properties between Marbella and Estepona.

For the young local population and the working classes, this scenario translates into increasingly difficult access to rental properties and virtually prohibitive access to purchase properties in established coastal locations.

Tourist accommodation and second homes: direct competition for the residential stock

The Costa del Sol has established itself as a leading international tourist destination. This reality is directly reflected in the housing market:

Andalusia has close to 100,000 registered tourist accommodations, nearly half of which are located in the province of Málaga.

A significant part of the housing stock is in the hands of non-resident foreigners, who buy for second homes or investment.

In practice, this means that thousands of homes on the Costa del Sol are not intended for permanent residence, but rather for:

• Short-stay holiday rentals.
• Occasional use as second homes.
• Investment products geared towards profitability.

For residents looking for permanent housing, this dynamic acts as a “vacuum cleaner” for stock: fewer homes available for local households, more pressure on prices and greater difficulty in accessing them.

The underlying clash: demographics, production model and land policy

The problem is not just one of prices; it is structural. It can be summarised on three fronts:

1. Dynamic demographics in very specific areas

Spain is growing, but not uniformly. Malaga and the Costa del Sol are experiencing a sharp increase in population, driven by internal and external migration, in a limited territory with strong tourist appeal.

2. Insufficient and poorly aligned residential production

Less is being built than is necessary to keep pace with the formation of households. And a very significant part of the new supply is aimed at the upper-middle, luxury or investment segments, leaving the demand for affordable housing for young people and the middle classes unmet.

3. Housing as an asset rather than a commodity

The boom in tourist accommodation, the influx of international investment and the perception of housing as a ‘safe haven’ have shifted the focus away from housing as a home. The result is a dual market: those who bought years ago or have high incomes have an advantage; the rest compete for a dwindling and expensive stock.

The consequences are well known: displacement of the local population to the suburbs or the interior, increased overcrowding in certain areas, delayed emancipation and a growing risk of social division between high-income residents and the working population.