Picture a seller in Marbella who bought five years ago. Prices are up. She has no mortgage pressure. She lists at €4,983/m² because her neighbour did, and she waits. Across town, a buyer from Manchester does the sums — €322,000 asking price, 20% deposit, roughly 10% in taxes and fees — and quietly decides not to decide. Neither of them blinks. So the property just sits.

This is what a thin market looks like. Not a crash. Not a correction. A standoff.

Málaga province recorded 2,711 home sales in December 2025, down 8.66% from the previous month and 9.78% year-on-year. (Confirmed February 2026.) That volume drop would normally signal a market softening. Except it hasn't. The province's price index rose 15.9% year-on-year over the same period. Málaga city alone is up 12.2% YoY, sitting at €3,632/m². Nationally, Spain posted its strongest transaction year since 2008, with 705,000-plus home sales, and Andalucía led the country at 143,794 transactions. The Costa del Sol is cooling within a broader market that is still running hot.

The mechanism is not complicated. Sellers don't need to sell. Foreign buyers, who represent 32.3% of purchases in Málaga province, are still arriving with capital that treats local affordability constraints as irrelevant. And local buyers, for whom a typical two-bedroom flat now requires roughly €96,651 upfront (20% deposit plus approximately 10% in taxes, notary fees, and registration costs) and would consume 37% of an average family's income in monthly mortgage payments, are exiting the market not because they chose to wait but because they ran out of options.

When that dynamic sets in, prices don't fall. The market just transacts less.

A thin market is not the same as a bad market, but it behaves differently depending on which side of a transaction you're on.

For current owners, the picture is straightforward. Your asset holds value. The foreign demand floor that has been supporting Costa del Sol prices since at least 2020 remains in place. A 32.3% foreign buyer share in a province with Málaga's profile does not evaporate in a single cycle. The risk for owners is not price collapse. It is time. In a thinner market, a property that might have found a buyer in 6 weeks in 2022 could sit for 4 to 6 months today before the right buyer appears. That is not a crisis unless you need to sell on a deadline.

For prospective buyers, the calculation that felt reasonable to delay is now looking like a strategy with diminishing returns. The "wait for a crash" position requires a motivated seller who needs to discount. Those sellers currently do not exist in meaningful numbers on the Costa del Sol. Prices in Estepona are running at €4,144.50/m². In Marbella, €4,983/m². (Confirmed January 2026, per Idealista market data.) Next year, the buyers competing for the same inventory will have more capital than you.

For renters, the other side of the thin market is equally uncomfortable. With 74,961 active viviendas de uso turístico — short-term tourist rental licences — competing with long-term stock, the supply available to residents is already compressed. Long-term rental prices in Málaga city as of January 2026 range from €660 to €1,045 per month for a one-bedroom in the centre, and from €1,260 to €1,995 for a three-bedroom. (Confirmed January 2026.) There is no near-term mechanism pointing toward relief.

The numbers are splitting the coast in two. Not dramatically, not all at once, but slowly, the way structural shifts always do: quietly, until the gap is too wide to ignore.

One economy belongs to those who got in. Owners with equity, investors with yield, people whose property decisions from 2017 to 2022 now look like the right call, regardless of what they were thinking at the time. For them, the thin market is an inconvenience at worst — slower to sell, harder to upsize within the province, but fundamentally sound.

The other economy belongs to those trying to get in now. For a local family, the €96,651 upfront entry barrier is not a speed bump. It is a structural exclusion. For an expat buyer with foreign income and sterling or dollar savings, it is a large but manageable number. That asymmetry is precisely why prices hold while volume drops. The buyers who remain in the market are the least price-sensitive.

What does this mean practically? The coast's character changes with it. Neighbourhoods that were mixed, with owners, long-term renters, and working families sharing the same streets, tilt further toward a higher-income, more transient population. That affects everything from which comercios de barrio — local neighbourhood shops — survive to how schools plan their intake. These are slow forces. But they are already visible.

Useful if you are asking questions or reading property listings:

Precio por metro cuadrado — price per square metre (the standard unit for comparing property values across areas)

Mercado de segunda mano — second-hand/resale market (as distinct from obra nueva — new builds, the two are tracked separately in Spanish property data)

The Costa del Sol property market is not correcting. It is freezing at the top. Sellers with no urgency are holding asking prices, foreign demand is sustaining those prices, and the buyers who are walking away are largely the ones the market can least afford to lose long-term. Volume is the leading indicator here, not price. Watch what transacts, not what is listed.

See you on the paseo — A. and the WaypointSur team, currently calculating how many square metres of beachfront €96,651 actually buys. Please don’t spoil it for them: they think it’s for the flat, not the deposit.