The International Monetary Fund (IMF) warned Spain that its real estate market is dangerously inching towards overheating as the housing industry faces growing questions about its financial stability.

“House prices have increased in recent years, although from a low level and without signs of a construction boom. While there is no clear evidence of a significant price misalignment yet, the authorities need to be vigilant. The set of macroprudential tools should be expanded to deal with potentia...