Since peaking in 2007, resale house prices in the Spanish capital have fallen 60pc, according to the latest report from Tecnocasa, a franchised chain of estate agents.Resale house prices in Madrid continued falling in the first two quarters of the year, as they have done every quarter since peaking in 2007, say Tecnocasa.
Prices for previously occupied homes dropped another 12pc over 12 months to the end of June, leaving the average cost of resale housing in Madrid at 1,596 €/m2, based on sales handled by Tecnocasa.
Though one of the biggest chains in Spain, I doubt Tecnocasa’s market share in Madrid, or anywhere in Spain, is big enough to represent the market with a high-confidence factor. but it’s probably one of the best guides we have to what is happening to house prices in Madrid. At least their data is based on actual sales prices, rather than the subjective valuations used by pretty much all other house price indices in Spain.
As a result of the latest double-digit fall, house prices in the Spanish capital have fallen 60pc peak to present, on average. Prices have fallen the most in downmarket areas, and the least in upmarket areas.
House prices in Madrid range from 932 €/m2 in Villaverde, to 2,518 €/m2 in Chamberi. Other factors that raise the price of a resale property in Madrid, or rather defend the price from the biggest falls, is a lift in the building, a bigger surface area (>70m2), and the more recent the construction, the better.
I’ll wager that house prices have now undershot in Madrid. Why? Because the mortgage market is completely broken in Spain, having collapsed another 42pc last month. When mortgage lending returns to normal, which it must one day, house prices in Madrid will stop falling.