The aim of the paper is to develop a theoretical and empirical framework that allows us to determine the way the housing prices evolve in Barcelona. Housing is a durable good, which involves both consumption and investment components. That is why the behaviour of market for housing differs from both financial and goods markets. We develop a model that explains long run equilibrium relation between prices to buy and to rent, as well as dynamics of deviations from this equilibrium. Recent empirical studies of housing market shows significant fluctuations over time, but they have much less short-term volatility than financial markets and the changes in house prices have a bigger impact on consumer spending than do equity prices. We test the model with the data for Barcelona for two periods: 1970-1985 and 1985-2000. The general evolution of housing price exhibits the pattern of long wave; there have been two periods of sharp increase of housing prices during the second period. The dynamics of rental price exhibits a similar pattern, but the ratio of these prices is not constant over time. We argue that the periods of relatively high housing price with respect to rental price correspond to additional demand for housing coming from investors. Conclusion of the paper includes a detection of complex non-random dynamics of the prices for housing in Barcelona and explanation of this effect with the proposed theoretical model.