Record High property prices in Tenerife. Will it continue to raise?

Will Property Prices Keep Rising?

Property prices will keep going up in the coming years. Spain's property market is very different from 2008. Back then, prices rose because of greed. Now in 2025, the main problem is not having enough homes to buy. There are too many buyers and not enough properties.

Property prices have gone up by double digits each year in popular areas. In Tenerife, especially the south of the island, this affects both locals and foreign buyers looking for homes.

Why Property Prices Are Rising Across Spain

Property prices are now 10% higher than they were during the 2008 bubble. People in big cities protest every day because they can't afford housing. The same pressure exists in tourist areas like Costa Adeje and other parts of south Tenerife.

Several things are pushing prices up around the world. People saved lots of money during Covid and now want to spend it. After being locked up at home, people want to buy property. Central banks printed money, causing inflation. Building materials became more expensive due to supply problems.

Spain has its own specific problems. Spain builds less than 90,000 new homes per year but needs over 500,000. Too much red tape makes it hard to build new properties. New housing laws made landlords remove properties from the market. There aren't enough construction workers to build homes. The government built almost no social housing in 7 years.

How This Affects Tenerife Property Market

Tenerife faces similar challenges to mainland Spain, but with some key differences. The south of the island is hit particularly hard because it's a popular area for both tourists and people who want to live there permanently.

In Costa Adeje and nearby areas, property prices have gone up steadily. Foreign buyers compete with locals for limited housing stock. New developments are few and far between.

The Canary Islands have some protection because they control their own housing policies. This means Tenerife can make decisions that work for the island, not just follow mainland Spain's rules.

However, the same supply problems exist. There aren't enough new homes being built in south Tenerife to meet demand. Construction workers are hard to find. Building permits take a long time to get.

Investment Opportunities in South Tenerife

Despite rising prices, Tenerife offers good investment opportunities. The south of the island has steady demand from tourists and people wanting to move there permanently.

Areas like Costa Adeje have many benefits. They have year-round warm weather and good infrastructure. There's strong rental demand and limited new supply.

Property investors looking at Tenerife should focus on areas with proven track records. The south of the island has shown consistent growth over many years. New build properties in Costa Adeje and surrounding areas often sell quickly. This shows strong demand that's likely to continue.

Government Response and New Taxes

The Spanish government blames foreigners for high property prices. They say tourists and foreign buyers drive up costs. This isn't really true in most places, but it affects Tenerife differently.

In Tenerife, foreign buyers do play a bigger role than in mainland cities. The south of the island attracts many European buyers looking for holiday homes or retirement properties.

New taxes are coming that will affect Tenerife. There's a 21% VAT on tourist rentals and a 100% tax on non-EU property buyers. There are also stricter rules for vacation rentals.

These taxes might slow down some buyers, but they won't fix the main problem. There still aren't enough homes being built in Tenerife to meet demand.

Why Tenerife is Different

Tenerife has advantages that mainland Spain doesn't have. The Canary Islands control their own housing policies. Tourism brings steady income to support the economy. Limited land means property holds its value well. Year-round appeal keeps demand strong.

The south of the island particularly benefits from these factors. Costa Adeje and nearby areas have become established destinations that attract repeat visitors and investors.

Unlike mainland Spanish cities, Tenerife doesn't have the same pressure from local residents being priced out. Many people choose to move to the island, so population growth is more welcome.

What Buyers Should Know

Property prices in Tenerife will likely keep rising for several reasons. There's limited land for new development and strong demand from tourists and residents. There aren't enough construction workers, and the approval process for new builds is slow.

The south of the island offers the best opportunities because of established infrastructure and proven demand. Costa Adeje remains a top choice for both holiday homes and permanent residence.

Buyers should act soon if they're considering Tenerife property. Waiting for prices to drop isn't realistic given the supply shortage.

Building More Homes: The Real Solution

The only way to stop price rises is to build more homes. Tenerife needs to speed up building permits and find more construction workers. They need to release more land for development and build affordable housing for locals.

Some progress is happening, but it's slow. New developments in south Tenerife take years to complete. By the time they're finished, demand has grown even more.

Local governments in Tenerife are more flexible than mainland Spain. They can adapt policies to help the island's specific needs.

The Future of Tenerife Property

Property prices in Tenerife will continue rising over the next few years. The south of the island will see the strongest growth because of limited supply and high demand.

Costa Adeje and similar areas offer good investment potential. They have proven track records and strong fundamentals that support continued growth.

Even if the government takes action to build more homes, it will take years to make a difference. Building new properties takes time, and the demand gap is huge.

Smart buyers will focus on established areas in south Tenerife where infrastructure is already in place. These locations offer the best chance of continued value growth.

Conclusion

Spain's property price boom affects Tenerife differently than mainland cities. The south of the island has unique advantages that support continued growth.

While prices will keep rising, Tenerife offers better opportunities than many other Spanish destinations. The island's special status, tourism appeal, and limited supply create a strong foundation for property investment.

Costa Adeje and south Tenerife remain attractive for both holiday homes and permanent residence. The key is to act before prices rise even further. The property shortage won't be fixed quickly, so Tenerife property prices will likely continue climbing for years to come.