House prices in Spain

What do the statistics really tell us?

Conveyancing Tuesday, June 16, 2015
House prices in Spain

We hear so many different accounts of what the trends are in buying houses in Spain that it can be very difficult to separate the myth from the fact. Has the price bottomed out or is it still on its way down? Are the number of foreigners buying on the increase or have they stabilised?

Perhaps one of the difficulties of writing a definitive article about house prices in Spain is that we are seeing different patterns emerge from different regions. The market is not behaving in the same way across the country. 

For example, it would seem as though the dream of buying by the beach lives on. El Mundo reports that the coastal regions of Malaga, Balearics and Alicante are showing clear signs of movement when it comes to property.

Regional trends

In a quarter of the locations investigated the first quarter of 2015 saw house prices in Spain increase. The greatest price increases were registered in Jávea (Alicante) where they rose by 11.2% According to Tinsa (leaders in property valuation and consultancy) the clearest signs of recovery are to be seen in Malaga (Marbella and Benahavis) and the Balearic Islands (Palma de Mallorca, Andratx, Calvia and Ibiza).

Five coastal towns are identified as reaching a turning point. These  include Torrevieja (4,136 purchases), Marbella (3,997), Orihuela (3,527), Mijas (2,384) and Estepona (2,113).

There are vast differences in the price of houses across the country. Sitges is the most expensive area to buy with property costing €2,694 per meter. Other expensive locations in Spain include Calvia, Andratx, Alcudia and the Balearic Islands. At the other end of the scale is Almazora Castellon where you can buy Spanish property at only €804 per square metre.

However, the report is hesitant about making too grand a claim for house prices in Spain from these figures. It is pointed out that it would be best to wait until the next few quarters have expired to see if the trend continues. What does seem to be clear is that the market is developing at different rates with prices falling still in some regions.

No quick fix

The ‘slump’ has certainly not been short lived. It is now seven years since the crash of 2008 and the effects of the downturn seem to be still as sharp as ever they were. Any possibility of a quick fix is long gone. Over this period the value of houses in Spain has declined in leaps and bounds to the point that in many parts of the country the average price of a property has fallen between 60 and 62%.

Oversupply of housing may gradually be being reduced in some areas such as the coast but there is no evidence of an increase in transactions on the sale of land in most of these areas. This aspect of the market seems to have ground to a halt, with some exceptions.

Alicante, particularly Denia and Villajoyosa, has seen some rise in market value and there has been some activity in Torrevieja and Orihuela in relation to Sareb land ownership. Sareb was the ‘bad bank’ set up to specifically deal with house repossessions.

Cranes are back…

…in some areas at least. Alicante (Orihuela, Guardamar del Segura, Torrevieja, Torre de la Horadada, L’Alfas del Pi, Denia and Villajoyosa); Valencia (Oliva); Murcia (San Juan de los Terreros); Malaga (Mijas, Marbella, Estepona, Benahavis) and Cadiz (Tarifa, Puerto de Santa Maria, Rota and San Roque).

In most places across Spain, however, there is a shortage of new building land as a result of lack of credit, weak demand and existing stock still waiting to be sold. The projects that there are, are usually to be found in highly desirable locations such as the beach front and are targeted at the foreign buyer.

The best indication of the myth and reality of building trends can be tracked through the building permits given by the Ministry of Development. The Spanish coastal towns with the greatest number of permits include:

  • Orihuela – 702 units
  • Lorca – 440 units
  • Getxo – 435 units
  • Torrevieja – 398 units
  • Pilar de la Horadad – 248 units
  • Elche – 185 units

The conclusion?

It looks like there is some movement in the Spanish housing market but this is largely in relation to coastal areas. What we are not seeing much of, apart from in selected areas, is the flurry of building and the horizon dotted with cranes that we became so used to in the early years of 2000. 

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