The average price of newly built property in the regional capitals of Spain fell by 1.2% in the first 6 months of the year, the first time this has happened in 15 years, according to the latest report from La Sociedad de Tasación, Spain’s largest appraisal company.
The report shows that new build property prices fell in 35 of Spain’s provincial capitals, but
rose in 11, though by less than the general inflation rate. As a result, the average price of newly built property in Spain’s cities fell by 1.2% to 2,781 Euros per square metre at the end of June. During the same period last year, new build prices rose by an average of 4%.
This is the first time that new build prices published by La Sociedad de Tasación have fallen since the recession of 1992 and 1993, when prices fell 1.5% and 0.2% respectively.
Barcelona continues to be Spain’s most expensive city for newly built property, where despite a drop in average prices of 0.4%, newly built property still costs more than 4,500 Euros/m2, ahead of San Sebastian (down 0.6% to 4,035 Euros/m2), and Madrid (down 1.4% to 3,916 Euros/m2).
At the other end of the price scale, the cheapest cities in Spain for newly built property are Pontevedra in Galicia (1,848 Euros/m2), Badajoz in Extremadura (1,525 Euros/m2), and Lugo in Galicia (1,547 Euros/m2).
The report notes that the Spanish real estate market is “showing signs of a serious slowdown” as a result of a “substantial fall in sales”, particularly in holiday home destinations and on the outskirts of mid-sized cities. The report also identifies the large surplus stock of newly built properties as one of the main reasons for the markets problems, though it argues that this overhang will be absorbed in the next couple of years, bearing in mind the slump in housing starts this year.
Turning to the fall in demand, the report attributes this to high property prices, the rise in mortgage rates, and “the serious problems in raising finance experienced by both developers and buyers.” On a positive note, the report argues that potential demand is still strong, even if the number of sales is falling.