This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
The asking price index published by the Spanish property portal Idealista.com reveals stark differences in vendor pricing power in different parts of Spain.
Are property prices going up or down in Spain? Is negotiating power shifting from buyers to vendors? It all depends on location and market segments, with big differences to be found between them.
Average asking prices nationwide fell 2.7% in the third quarter to 1,533 €/m2, reveal Idealista, but prices rose in nine of Spain’s 17 autonomous regions, and in 24 provinces, with Barcelona in the lead amongst big cities, up 3.8%.
Compared to crisis lows, house prices in Barcelona have risen 24% since they bottomed out in 2013. In Valencia city prices are up 8.1%, and by 7.7% in Madrid. In a recent analysis I did of asking prices published by Idealista I found that prices in Ibiza have risen most of all, and are now significantly higher than their boom-time peak (chart below).
So we have a situation where house prices are in full recovery mode in Madrid, Barcelona, and some other places on the Spanish coast, but continuing to fall in many cities and provinces in the interior. Generally speaking, markets are recovering where foreigners buy, but still languishing in the doldrums in markets that get no support from foreign demand.
“The data from our report reflect more than ever the two speeds at which the sector is moving,” comments Fernando Encinar, head of research at Idealista. “Half of the markets are seeing price increases, whilst the other half are falling, a tension that means that the national price is practically stagnant.”
Encinar warns that the political impasse in Madrid is starting to have a negative impact on the market. “The uncertainty generated by the elections has put a brake on home sales as reflected in the latest figures from the INE [National Institute of Statistics]”
Chris Nation says:
“In Valencia city prices are up 8.1%. ” Lovely! Marvelous!
I don’t generally approve of property price inflation. When I moved out of London, having bought a business and home in Devon, the wild and increasing disparity in prices when I sold up meant I couldn’t get back into London. One of the potential buyers of my Devon property said “I have a house worth £XXX,XXX and all I do is live in it”. Capital locked up.
I wrote to then Chancellor, Gordon Brown, ranting about the absurd level of British capital locked up in residential property, doing nothing useful. I have always objected to price rises in an economy generally being considered bad but price rises in the residential property market being signs of ‘the strength of the market’, ‘market recovery’ and other positive phrases. The fact is that a rise in property price is inflation just as much as price rises in shoes and carrots.
More money needed to buy a home means less money to spend in the wider economy. Using (notional) equity in one’s home to fund shopping by borrowing has led to tears before bedtime over and over again but despite banks, under pressure from governments, to tighten up on this source of money, it keeps happening.
I got no reply from Gordon Brown. I know that my position of property price inflation is eccentric and flies in the face of the almost universally accepted view that it ‘A Good Thing’. So, if prices in Valencia have increased 8.1%, I’ll come in from the wilderness and join the general rejoicing. After all, I have €20,000 renovation costs to make back.
Mark Stücklin says:
I agree that rising house prices per se are not necessarily a good thing. It depends why they are rising. It could be supply-demand, easy credit, rising incomes, Govt. interference in the market, or speculation, to name some of the reasons. And falling prices also have some negative consequences. Anyway, in Valencia and Barcelona prices fell so much in the bust it was possible to buy near replacement cost with land valued at zero. I think we are seeing prices correcting upwards, but I don’t know how long they can carry on rising, especially in Valencia. I think people are buying because it’s cheap, unlike a place like London where price doesn’t seem to come into the equation.