Sun, sea… and soaring demand: Inside the Costa del Sol property boom

A new report from Engel & Völkers shows property prices across the Costa del Sol have climbed again in 2026 – but the real story isn’t just how high they’re going, it’s where buyers are heading next.

Because while Marbella and Estepona continue to dominate headlines, a quieter shift is unfolding further east. Increasingly, attention is turning to the Axarquía, where demand is rising fast, and prices, for now, still offer a window of opportunity.

A market still on the rise

The Costa del Sol has spent years cementing its position as one of Europe’s most desirable property markets, and the latest figures suggest that momentum is far from over.

Average prices now sit at around €3,500 per square metre for houses and over €4,200 for apartments, according to the latest data – marking steady annual growth of up to 5%. In prime areas such as Marbella’s “Golden Triangle,” prices can soar well beyond €5,000 per square metre, driven by luxury developments and sustained international demand.

But this is no longer the frantic, post-pandemic rush. The market is evolving.

Buyers are taking more time, comparing options and negotiating harder. Overpriced homes are lingering, while well-presented, realistically priced properties continue to sell quickly. In short, the market is stabilising, not slowing.

International demand shows no sign of fading

If there’s one constant on the Costa del Sol, it’s the strength of foreign demand.

Buyers from the UK, Germany, Scandinavia and the Netherlands remain key players, joined by growing interest from Eastern Europe and the Middle East, particularly in the high-end sector.

But the profile of those buyers is changing.

It’s no longer just retirees seeking sunshine. Today’s market is increasingly driven by remote workers, entrepreneurs and young families, many relocating permanently in search of lifestyle, climate and space.

The pandemic may have triggered the shift but it has well and truly stuck.

Axarquía: the rising alternative

While the western Costa del Sol continues to command premium prices, the Axarquía is emerging as one of the region’s most compelling alternatives.

Stretching from Rincón de la Victoria to Nerja and inland to villages like Frigiliana, the area offers a different pace and a different price point.

Here, property values typically range between €2,000 and €3,000 per square metre, depending on location, making it significantly more accessible than Marbella or Estepona.

That relative affordability, combined with its authentic Andalusian charm, is drawing a new wave of buyers. Relocators, creatives and lifestyle-driven investors are increasingly choosing the Axarquía for its space, scenery and sense of community.

In many ways, it represents what the Costa del Sol once was, before global demand pushed prices to today’s levels.

A place to live, not just visit

The Costa del Sol is no longer just a holiday destination, it’s becoming a year-round home for a growing international population.

Improved infrastructure, international schools and healthcare facilities are supporting this shift, particularly in areas like Málaga city, Mijas Costa and Estepona. Communities are becoming more diverse, younger and more permanent.

But this transformation is not without challenges.

Housing supply is struggling to keep up with demand, and affordability is becoming an increasing concern for local residents. In many areas, new development simply isn’t keeping pace with population growth, putting additional pressure on prices.

Investment still holds appeal

Despite rising prices, the Costa del Sol continues to attract investors.

Rental yields remain strong, reaching up to around 7% in some coastal locations, although tighter regulations on short-term holiday lets are beginning to reshape the landscape. Licensing requirements are stricter, and enforcement is increasing, prompting some investors to shift towards longer-term rental strategies.

Even so, the fundamentals remain attractive: high demand, limited supply, and a global audience of buyers.

Looking to the future

The big question, of course, is whether the market can keep going.

For now, the answer appears to be yes…but at a steadier pace.

Most experts predict continued growth, albeit more moderate, as the market finds a more sustainable rhythm. The days of rapid, double-digit increases may be behind us, but the long-term outlook remains positive.

And as buyers continue to search for value, lifestyle and opportunity, the spotlight is likely to keep shifting east.

Because while Marbella may still be the headline act, the Axarquía is quickly becoming the one to watch.