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Spanish property prices have stabilised

According to the latest House Price Index from Tinsa, the price of housing in Spain increased by 1.3% in May, when compared to the same month in the previous year.

From January to May the increase is 1.5%, slightly below the 1.9% registered for January to April, further confirming a stabilisation in the real-estate market.

Before we get excited about the increases we have to remember that prices are still way below the peak of 2007, with Tinsa’s data putting today’s prices at 41.4% below the maximum.

Categories

The Tinsa report breaks the country down into categories, rather than regions or provinces, with “Capitals and Large Cities” and the “Balearic and Canary Islands” both registering an increase of 3.5% in May, when compared to the same month in the previous year. “Mediterranean Coast” house prices showed an annual increase of 1.6%, while “Municipalities” recorded a slight increase of 0.7%. “Other Municipalities” was the only category to register a decline in prices with a 2.5% fall, year-on-year.

When looking at Jan – May, prices on the “Mediterranean Coast” have remained stable. However, “Capitals and Large Cities” experienced cumulative growth of 1.3%. “Other Municipalities” saw growth of 1.5%, while the “Balearic and Canary Islands” have both seen average house prices increase by 4.2% since the start of the year.

Second-Hand Property

In contrast, according to data released by property portal fotocasa, the average cost of resale property actually fell in May with a decline of 0.3%, when compared to the previous month, to stand at 1,620 €/m². For the first five months (Jan – May) the decline is 0.9%, when compared to the same period in the previous year, continuing the trend of recent months showing softer annual variations.

Beatriz Toribio, from fotocasa Studies, said “So far this year our real estate index is recording very smooth annual decreases, of a few tenths, which indicate that the price of housing in Spain is stabilising. And as happened in 2015, in some areas of Catalonia, Madrid, the islands and part of the Mediterranean coast, we are seeing a recovery. This fact, coupled with the improvement in the operations of buying and selling, the largest volume of mortgages and increases in building licences tells us that the industry is returning to normal after eight years of crisis,”

Fotocasa puts the cumulative fall since 2007 at -45.1% for second-hand property. In April 2007 the average cost of resale property stood at 2,952 €/m². In this regard, 12 of Spain’s autonomous communities have fallen by more than 40% over the last nine years. The community of Rioja has seen the largest fall with prices currently 57% lower than the peak. Other communities to see significant falls are Castilla-La Mancha (-53.5%), Navarra (-52.6%), Aragon (-52.2%), Murcia (-50.7%), Catalonia (47.9%), Valencia (-47.5%), Asturias (46.3%), Valencia (-47.5%), Catalonia (- 47.1%), Asturias (-46.1%), Madrid (-43.87%), Andalusia (-42.6%), Extremadura (-42%) and Cantabria (-40.5%).

Regional Increases

Of the 17 regions, four showed average price increases in May, although very small. The Basque Country saw the largest increase with prices going up by 0.5%. Madrid followed with an increase of 0.2%, while both Valencia and Navarra saw prices increase by 0.1%.

Four regions saw prices fall in May with Catalonia and Castilla-La Mancha both seeing prices decline by 1.5%, while Extremadura witnessed a 0.8% fall, and Castilla y León saw prices fall by 0.7%.

As usual, the Basque Country remains the most expensive region in Spain with resale property seeing an average price of 2,736 €/m², followed by Madrid where a square metre of second hand housing will cost 2,234 €, and Catalonia where you will pay an average of 2,012 €/².

The most affordable regions are Castilla-La Mancha (1,030 €/m²), Extremadura (1,082 €/m²) and Murcia (1,134 €/m²).

Provinces and Municipalities

When looking at second hand property pricing by province, there were increases in 12 of them with increases ranging from 0.1% to 1.3%. However, prices fell in 35 provinces with declines between -0.1% and -2.8%.

Out of the 809 municipalities in Spain, fotocasa’s data shows increases in 323, stable prices in 28 and decreases in 458. The municipality with the highest price is currently Zarautz where a square metre of resale property will set you back an eye-watering 4,628 €. In contrast, Aranzueque is the cheapest municipality with an average cost per square metre of only 490 €.