How extreme weather changes reshaping Spain’s property market Why global leaders should take note

In August 2025, Spain experienced its most extreme heatwave since records began, underscoring that climate change is no longer a distant prospect but a present reality—one already affecting cities, public health, and even property prices.

A recent industry study offers a striking look at how rising temperatures are reshaping Spain’s property markets in milder regions and shifting the value of housing.

Although focused on Spain, the country’s dramatic climatic contrasts make the findings an important indicator of broader internal climate migration patterns and how they can affect housing policies.

Spain’s eastern, southern, and inland regions endure hot, mostly dry conditions, while the northern coast benefits from a significantly cooler Atlantic climate. Unlike international migration, internal relocation within Spain involves minimal legal or bureaucratic hurdles, as an article on The Conversation platform featuring the study's findings notes.

Drawing on data from Idealista, Spain’s largest property portal, the researchers examined sale and rental prices in the 47 provincial capitals of mainland Spain between 2009 and 2024. They found that extreme heat measurably depresses property values: each additional day above 35°C results in a decline of €1.40 per square metre in sale prices and €0.0059 in monthly rental prices within the same province.

To put this into perspective, the average Spanish home is roughly 120 square metres. With around 700,000 homes for sale or rent in 2024, this drop translates into an estimated €117.6 million in annual losses on sales and €500,000 on rentals nationwide.

The study also shows that Spain’s cooler regions are gaining value as temperatures rise elsewhere. In these areas, sale prices have increased by €2.80 per square metre and rentals by €0.012, amounting to annual gains of about €235 million in sales and €1 million in rents. In effect, extreme heat is eroding value in some provinces while enhancing it in others, allowing cooler regions to benefit economically as their property markets strengthen.

This redistribution of value—linked to patterns of internal climate migration—carries major implications for future urban development, property markets, and regional planning. It raises significant questions: Is this an emerging form of climate gentrification? Are Spain’s coolest regions becoming its most coveted real estate markets?

According to the study, this shift is already underway. Property markets are highly responsive to climate risks. In countries such as the U.S. and China, declines in property values have been documented in areas prone to hurricanes, wildfires, and floods. In Spain, extreme heat exerts a quieter but persistent influence: while it does not directly destroy homes, it gradually diminishes their attractiveness and medium-term value.

This challenges the notion that financial and property markets are insulated from climate change. In reality, these are among the first areas where climate impacts translate into tangible economic consequences for ordinary people. When house prices fall due to rising temperatures, the effects ripple outward—reducing local tax revenues, limiting infrastructure investment, and weakening social cohesion.

The growing shift in housing demand toward cooler provinces reflects internal climate migration. Although typically associated with cross-border movement, such migration can also occur domestically. In Spain, extreme heat may push residents away from southern and inland regions toward the north or higher elevations, where living conditions are viewed as more sustainable.

The study emphasises that these shifts are both demographic and economic. The flow of property capital mirrors the movement of people.

As a result, areas perceived as more climatically comfortable can expect increased investment, but this may also drive up housing costs. The danger is that, as these regions become more desirable, local populations could be priced out, deepening inequality.

The article underscores that the key question is no longer whether climate change will reshape the market, but how society will respond. Policymakers must choose between proactive reforms or inaction that risks exacerbating inequality and generating substantial economic losses.

The study's authors stress that their work should be interpreted as a warning: climate change will reshape Spain’s property market, influencing prices, investment patterns, and access to housing. Integrating climate risk into housing policy and financial planning will be essential to ensuring a fair, sustainable, and resilient society in the face of intensifying heat and increasing territorial inequality.

By Nazrin Sadigova