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Monthly Wrap: Spanish property price update – where are prices rising the most?

Currencies Direct June 7th 2019 - 3 minute read

The domestic Spanish market is on the up and there are already 25% more foreign buyers in 2019 compared to the peak of the market prior to the 2008 financial crash.

As valuations go up the national average property price comes in at €1,636 per square metre and it is expected that prices will continue to follow this pattern of steady growth for the rest of 2019.

What types of property are seeing price rises?

Depending on the type of property you are looking at you will find prices are only rising where demand outstrips supply. Sales of larger family-style homes have been decreasing while demand for townhouses, apartments, bungalows and smaller ‘lock up and go’ homes has been increasing.

Property sales in 2018 saw an annual increase of 8.9%, with 579,628 properties sold, boosting the transaction number to a 10-year high.

It has been noted that – following years of decline – the population of Spain is once again growing and this is having an effect on the housing market. Data shows that out of the 10 provinces that saw an increase in population, six saw the highest increase in prices.

The demand for new-builds seems to be unstoppable, however if you are considering purchasing a brand new property think about whether it is worth paying around twice or more per square metre compared to a resale.

Where are prices rising the most?

Looking at data from between January and November 2018, home prices in Madrid increased by 17%, which according to idealista is just 5% below the peak. Meanwhile, the number of property transactions rose by 8%.

Valencia saw the total value of sales rise by 23%, with the area also being popular with the overseas market as foreign buyers represented 10.5% of sales.

Meanwhile, transactions were up by 11% in the final three months of 2018 in Marbella, on the Costa del Sol.
Another area popular with the overseas market is the Costa Brava, north of Barcelona. The number of transactions between January and November 2018 in this area rose by 6%. Added to this, prime transactions (above €900,000) rose by 18% in the first six months of 2018. The proportion of foreign buyers was also high, reaching 27% compared to the 12% national average.

However, if you are a buyer, finding a high quality property at the right price in a prime location may be an issue over the year as prices continue to rise in the most popular areas.

Looking at data from this year, here’s a list of the places where prices are rising fastest.

Top five performers of Q1 2019:

  1. Ourense (Galicia) +3.1%
  2. Murcia (province) +2.7%
  3. Araba/Alava (Basque Country) +2.7%
  4. Madrid +2.6%
  5. Castellón (Valencia) +2.6%

Where are prices declining the most?

Some areas of Spain have not seen any notable price rises in the last year for a number of reasons, with some places reporting a fall in average values.

Ibiza, for example, saw the number of transactions decrease by 3% due to stringent holiday rental restrictions, but at the same time prices jumped in some areas on the island. In Ibiza Town prices slumped by 2% in the final quarter of 2018, whereas elsewhere on the island prices in Sant Josep were up by 12%, and in Santa Eluària des Riu they jumped by an astonishing 17%.

Just as property prices are increasing in areas with rising populations, in areas where the population has fallen so have the prices. Last year, by way of example, the population of Teruel – a town inland from Valencia – fell by 0.9%, and property prices fell by a corresponding 4.6%.

Again, looking at data from the first quarter, here’s a list of some of the worst performing areas.

Places in Spain with decreasing property prices Q1 2019:

  1. Soria (Castile & Leon) -3.8%
  2. Lleida (Catalonia) -3.2%
  3. Lugo (Galicia) -3.2%
  4. Cáceres (Extremadura) -3.1%
  5. Estremadura (whole region) -2.5%

Finally, it’s worth remembering that while prices are definitely on the rise, they are still around 35% lower than they were at the height of the boom before 2008.  

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Currencies Direct

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