The Spanish housing boom of the early 2000s has raised enormous attention at an international level. To better understand what is happening in the housing market, the current Spanish boom needs to be put into context. Housing demand, the motor of the boom, was triggered by population growth, employment generation, increase of per capita income, and favorable financial conditions. Supply has reacted in a very flexible manner and 2006 witnessed historic levels in residential construction. Yet this boom seemed to be coming finally to an end in 2007, mainly driven by mortgage rate increases. The aim of this paper is threefold: (1) to identify the determinants of the rise of house prices in the last decade, (2) to discuss the likely future of the housing market, and (3) to build an econometric model of the Spanish housing market.