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The Canary Islands residential property market faces an unprecedented supply crisis as we reach mid-2025.
With available homes for sale and rent hitting historic lows while demand continues to surge, potential buyers and investors need to understand the real situation on the ground. This comprehensive guide answers the key questions about the Canary Islands housing market, based on the latest data and market trends.If you want to go deeper, you can check our pack of documents related to the real estate market in Spain, based on reliable facts and data, not opinions or rumors.
The Canary Islands housing market is experiencing a severe supply shortage with only 4,200-4,500 homes available for sale in Gran Canaria, down 13-20% year-over-year, while over half of rental properties have converted to tourist accommodations.
With construction at just 2,900 units annually versus the 50,000 homes needed by 2030, property prices have surged 121% since 2015, pushing housing costs to consume 47-55% of local incomes.
| Key Metric | Current Status (2025) | Change from Previous Years | Impact |
|---|---|---|---|
| Total homes for sale | 4,200-4,500 (Gran Canaria) | -13% to -20% year-over-year | Critical shortage |
| Long-term rental listings | 50% below 2022 levels | Over half converted to tourist lets | Severe rental crisis |
| New homes built annually | 2,900 units | Down from 40,000+ a decade ago | Major construction deficit |
| Average price per m² | €2,736-2,869 | +121% since 2015 | Affordability crisis |
| Short-term rental properties | 48,000-51,000 units | +40% since 2022 | Tourism dominates housing |
| Monthly rent average | €1,200 | +21% in 5 years | 47-55% of local income |
| Foreign buyer share | 20-25% | Double national average | Price pressure |
| Construction costs | €1,000-1,200/m² | +40% increase | Development slowdown |
How many homes are currently available for sale or rent, and how does this compare to recent years?
The Canary Islands residential property market has experienced a dramatic supply squeeze in 2025.
Active listings for homes for sale have dropped by approximately 13% across the archipelago in the past year, with capital cities Las Palmas and Santa Cruz seeing even sharper declines of up to 20%. To put this in perspective, Gran Canaria's available listings on major property portals have fallen from 5,900 properties to between 4,200 and 4,500 in just one year.
Rightmove currently shows only 1,937 properties for sale across the islands, though this represents just a portion of the total market. The rental market situation is even more dire, with long-term rental listings having plummeted as over half of all residential rental properties have been absorbed by the tourist accommodation sector.
This represents the lowest inventory levels in modern history, creating intense competition among local residents seeking homes. The situation has become so severe that properties often receive multiple offers within days of listing, and bidding wars have become commonplace in desirable areas.
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How many new homes have been built recently, and is construction increasing or decreasing?
The Canary Islands construction sector shows a massive deficit between supply and demand.
Currently, the islands build approximately 2,900 new homes per year - a shocking decline from the 40,000+ units planned annually just a decade ago. This represents a 93% drop in construction activity, highlighting the severity of the building crisis.
While 2023 saw a temporary uptick with nearly 11,000 new homes registered (the highest since 2015) due to a government push and a €4 billion housing initiative, the underlying trend remains severely inadequate. The islands need an estimated 50,000 new homes by 2030 to meet demand, meaning current construction rates fall short by over 94%.
The construction pipeline remains anemic, with fewer than 3,000 units under construction at any given time in 2025. This structural undersupply continues to fuel the housing crisis across all seven islands, with no immediate relief in sight as developers struggle with rising costs and bureaucratic delays.
How much has tourism grown, and what portion of housing has shifted to tourist rentals?
Tourism in the Canary Islands has reached unprecedented levels, fundamentally transforming the residential housing market.
The islands welcomed over 16 million visitors in 2023, with international arrivals up 11.4% year-over-year, and the years 2024 and 2025 are on track to break these records further. This tourism boom has created a massive shift in housing allocation that directly impacts local residents.
| Tourism Impact Metric | Current Numbers | Change from 2022 |
|---|---|---|
| Homes registered as tourist accommodations | 48,000 to 51,000 | +18.6% |
| Tourist accommodation beds | 220,000 | +40% |
| Properties in tourist hotspots serving tourists | Up to 33% | N/A |
| Former long-term rentals converted | Over 50% | N/A |
In tourist hotspots like La Oliva and Arona, nearly one-third of all housing stock now serves tourists rather than residents. This massive shift has essentially removed half the rental market from local residents, creating a zero-sum game where tourism gains directly translate to residential losses.
The profitability of short-term rentals, with average host incomes of €21,000 annually and occupancy rates of 73-78%, continues to drive this conversion trend.
Are construction costs rising, and how does this affect new developments?
Construction costs in the Canary Islands have surged dramatically, creating a major barrier to new development.
Costs have risen from €700-800 per square meter to €1,000-1,200 per square meter in recent years, representing a 40-50% increase that severely impacts project viability. This surge affects development in multiple ways that compound the housing shortage.
Developer profit margins have been squeezed to unsustainable levels, leading many to abandon residential projects in favor of more lucrative commercial or tourism-related developments. Many planned projects have been delayed or cancelled entirely as the numbers simply don't work anymore.
Affordable and social housing projects have become economically unfeasible without heavy subsidies, which are not always available. The increased costs inevitably get passed to buyers, further inflating property prices and putting homeownership out of reach for many local residents.
Combined with bureaucratic delays and land scarcity, these rising costs create a perfect storm that discourages new construction precisely when it's needed most.
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What's the exact scale of property owners switching to platforms like Airbnb?
The shift to short-term rentals represents one of the most dramatic changes in the Canary Islands property market.
Active short-term listings have grown from 43,000 in 2022 to 51,000 in 2025, an 18.6% increase that shows no signs of slowing. The profitability gap explains this massive shift - short-term rental hosts earn an average of €21,000 annually with median occupancy rates of 73-78%, significantly outperforming long-term rental yields.
More than a quarter of short-term rental properties are now owned by companies rather than individuals, indicating the sector's increasing commercialization. Professional property management companies have entered the market en masse, operating portfolios of dozens or even hundreds of properties.
The economic incentives are clear: a property that might rent for €800 monthly to a local resident can generate €2,000-3,000 monthly as a tourist rental. With such disparities, property owners continue to make the switch despite new regulations.
This trend has removed approximately 25,000-30,000 units from the long-term rental market since 2022 alone.
Why aren't developers building more housing?
Developers face multiple barriers that make new construction projects increasingly difficult in the Canary Islands.
Land scarcity represents the primary challenge, with limited available land especially in desirable coastal areas where demand is highest. Much of the territory is protected or unsuitable for development, and developers must compete with tourism infrastructure for prime locations.
The bureaucratic nightmare cannot be overstated - developers must navigate up to 14 different fiscal and administrative processes just to begin a project. Urban license approvals, though recently capped at six months, still cause significant delays, and regulatory uncertainty discourages long-term investment planning.
Profitability challenges compound these issues. High land costs combined with soaring construction expenses make it difficult to deliver housing at prices locals can afford while maintaining viable margins. Competition from the more lucrative tourism sector means many developers simply choose to build hotels or tourist apartments instead.
The lack of effective government incentives for residential development, slow implementation of public housing initiatives, and absence of a coherent strategy to prioritize residential over tourist development all contribute to the ongoing shortage.
How has local housing demand changed?
The Canary Islands face multiple demand pressures that continue to intensify the housing crisis.
Population growth remains steady, with projections indicating an increase of over 100,000 people by 2031. More than 80% of residents concentrate in urban areas like Las Palmas de Gran Canaria and Santa Cruz de Tenerife, creating intense pressure in these markets.
| Demand Driver | Impact on Housing | Scale |
|---|---|---|
| Mainland Spanish migrants | Seeking better climate and lifestyle | Thousands annually |
| Digital nomads/remote workers | High purchasing power, compete with locals | +7.5% foreign-born residents |
| Foreign buyers | 20-25% of all purchases | Double national average |
| Single-person households | Increased unit demand | Growing trend |
Foreign buyers deserve special attention as they now account for 20-25% of all property purchases, far exceeding the 10% national average. These buyers typically pay premium prices, driving up the overall market and removing units from the local residential pool as many purchase properties as second homes or investments.
It's something we develop in our Spain property pack.
How have property prices and rents changed compared to local incomes?
The affordability crisis in the Canary Islands has reached critical levels that threaten social stability.
Property prices have skyrocketed, with the average 80m² home price jumping from €104,000 in 2015 to €229,500 in 2025 - a staggering 121% increase. Price per square meter has similarly surged from €1,300 to €2,736-2,869, representing a 110-120% increase.
The rental market shows equally alarming trends. Average monthly rent has risen from €990 to €1,200, a 21% increase that dramatically understates the real impact when combined with falling wages. Some areas now see rents as high as €17 per square meter, putting even modest accommodations out of reach.
The most shocking statistic is that housing costs now consume 47-55% of gross local income, far exceeding the recommended 30% threshold. This is particularly devastating given that local wages have fallen by 6.8% over the past three years while rents have risen by over 40% in the same period.
The time needed to purchase a home has increased from approximately 8 years of salary to 9.2 years, and this assumes saving 100% of gross income - an obvious impossibility.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Spain versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
What are the government and municipalities doing about this crisis?
Authorities at various levels have implemented or proposed multiple measures to address the housing crisis.
Regulatory actions include new laws requiring mandatory registration for short-term rentals, technical standards compliance, and caps in saturated areas. Municipalities have been empowered to limit tourist lets and prioritize residential housing, while urban license processing has been capped at six months to speed construction.
The government is also requesting EU permission to restrict property sales to non-residents and has implemented rent controls through annual rent increase caps and extended tenant protections under the new national Housing Law. Heavy fines for unlicensed short-term rentals can reach up to €400,000.
Financial incentives include tax breaks for sustainable and eco-friendly housing developments, grants for private sector investment in affordable rentals, and new rental aid programs targeting low-income and young residents. There's also a proposed increased Property Transfer Tax on large landlords with proceeds earmarked for public housing.
Despite these efforts, implementation remains slow and enforcement inconsistent, limiting their immediate impact on the crisis.
What does the housing supply look like for the next 1-2 years?
The short-term outlook for housing supply in the Canary Islands remains challenging with little relief in sight.
No significant increase in new construction is expected before 2027, as current projects in the pipeline will add fewer than 6,000 units total - a drop in the ocean compared to demand. Conversion of tourist properties back to residential use will be gradual and limited, despite new regulations.
Sales prices are projected to rise another 8-12% by the end of 2026, while rental prices will likely increase 15-20% over the next two years. Continued pressure from tourism and foreign investment shows no signs of abating.
Market dynamics will intensify with competition for available properties becoming fiercer. Properties in prime locations will sell within days of listing, and bidding wars are expected to become even more common.
Off-market deals will likely increase as sellers seek to avoid the frenzy of public listings and secure quick sales to cash buyers.
What's the 5-10 year outlook for housing supply?
The long-term trajectory depends heavily on policy implementation and market forces, but current trends suggest continued crisis.
The current housing deficit of nearly 20,000 homes will likely grow to 35,000-40,000 by 2030 without dramatic intervention. The need for 50,000 new homes by 2030 requires building 7,000+ annually, compared to the current 2,900 - a target that seems increasingly unrealistic.
Land constraints and environmental protections limit expansion possibilities, while rising sea levels due to climate change may reduce available coastal land even further. The islands face fundamental geographic limitations that cannot be overcome through policy alone.
Potential improvements could come if regulations successfully convert 20-30% of tourist properties back to residential use, if construction costs stabilize and bureaucracy streamlines, and if public-private partnerships accelerate social housing development. However, these remain largely hypothetical at this point.
The likely scenario, without dramatic policy changes, is that the housing crisis will persist through 2030-2035, creating increasing social tensions and potentially limiting economic growth.
What should property buyers know right now?
For buyers considering the Canary Islands property market in 2025, understanding market realities is crucial.
Properties sell within days, sometimes hours, of listing, so buyers must act fast with pre-approved financing and decisive action. Budget 10-15% above asking price as bidding wars are common, especially in desirable areas.
Consider emerging areas like La Palma, El Hierro, and inland Fuerteventura which offer better value compared to saturated coastal markets. Always verify compliance with new energy efficiency and regulatory standards, as non-compliant properties may face expensive retrofitting requirements.
Factor in new restrictions on short-term rentals that may affect investment returns. What worked as an investment strategy five years ago may no longer be viable under current regulations.
Due diligence is essential - hire a lawyer familiar with new regulations, investigate any pending regulatory changes in the specific municipality, calculate returns based on long-term rental scenarios rather than short-term tourist lets, and consider property management costs and availability before purchasing.
It's something we develop in our Spain property pack.
What should current property owners consider?
Property owners in the Canary Islands face important decisions in 2025 as regulations tighten and market dynamics shift.
Those continuing with short-term rentals must ensure full compliance with new regulations or face potential fines up to €400,000. Professional management may be necessary to navigate complex and changing rules. Budget for increased costs including new tourist rental taxes and higher community fees.
Converting to long-term rentals offers advantages including government incentives, stable income with rent control protections, and contributing to solving the housing crisis. While yields may be lower, the reduced regulatory burden and social responsibility aspects appeal to many owners.
Some owners may choose to sell while the market remains hot. The current seller's market with multiple offers is attractive, and prices at historic highs may not be sustainable long-term. However, capital gains tax considerations for non-residents can be substantial.
Strategic planning is crucial - monitor municipal regulations monthly as rules change rapidly, join property owner associations for collective bargaining power, consider portfolio diversification across different islands, and evaluate exit strategies before regulations tighten further.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
The Canary Islands face an acute housing supply crisis in 2025, with available properties at historic lows while demand from tourism, foreign buyers, and population growth continues unabated. The conversion of over half the rental stock to tourist accommodation has created an unsustainable situation for local residents, with housing costs consuming up to 55% of income.
While government interventions show promise, their effects will take years to materialize. For buyers, the message is clear: act decisively, focus on compliance, and consider emerging areas for better value. For owners, staying informed about rapidly changing regulations while weighing the benefits of short-term profits against long-term sustainability is crucial. The next decade will determine whether the Canary Islands can balance their tourism economy with residents' basic need for affordable housing.
Sources
- Canarian Weekly - Housing shortage deepens as property listings fall
- Canarian Weekly - Housing Crisis: 50,000 homes needed
- Spanish Property Insight - Canary Islands push to curb foreign buyers
- Investropa - Real Estate Market Forecasts 2025
- La Voz de Lanzarote - Housing costs double in ten years