This paper contributes to the literature on housing market dynamics by offering a policy-oriented analysis of rental and sales price behaviour in Spain’s two largest cities, Madrid and Barcelona, between May 2007 and December 2024. Using monthly data from Idealista.com, we detect episodes of explosive price dynamics, identify their key determinants, and examine contagion effects across cities and market segments. Our findings reveal that rental markets often act as precursors to broader housing price surges, underscoring their strategic importance for policy intervention. Among the key drivers, hotel-based tourism appears to exert a stabilising effect on housing prices, while rising interest rates reduce the likelihood of explosive episodes. In contrast, population growth significantly increases the risk of price acceleration, and unemployment tends to mitigate it. These results have direct implications for housing policy, suggesting that rental markets should be prioritised in regulatory frameworks and that urban planning strategies, such as improving interurban transportation and regulating short-term rentals, can help mitigate housing market volatility. By linking empirical evidence to actionable policy recommendations, this study aims to support the development of resilient, inclusive, and forward-looking housing systems.
Fernández-Pérez et al. (Fri,) studied this question.