Here at Amat we have been collecting data on Barcelona’s real estate market in many of the years since ouf foundation in 1948. To promote transparency, and help potential buyers, sellers, and investors understand the market, here is a summary of the findings in our latest market report, for the first half of 2017.
In general, the market for homes in Barcelona and the surrounding areas is still very active, especially in new homes / development market. That said we advise caution, especially with respect to assumptions about prices and valuations, as price limits are very clear, and growth in the real economy is more important than expectations of rising prices when evaluating a property investment.
Supply of homes for sale in Barcelona
The supply side of the housing market needs to be understood in terms of new and resale segments.
After a long period of shortages, the supply of new homes is starting to match demand in the metropolitan area. There is now a good selection of new developments in both the city and the first line of suburbs, so buyers now have more choice than before, and developers have less pricing power. In the resale market, however, there is now very little on offer, and because there are so many real estate agents selling the same limited stock, the market is highly fragmented and home isn some cases overvalued, especially in the city of Barcelona.
Overall, we have enjoyed a 65% increase in the volume of our residential home sales in the first half of the year, mainly due to an increase in sales up 47% compared to the same period last year. The increase in sales breaks down into a 16% increase in resales, and a 61% increase in new home sales.
New homes market in Barcelona and surroundings
As just mentioned, our own figures show new home sales up 61% and reflect the buoyancy of this market. Further observations we would like to make to help you understand the state of this market are as follows:
- Generally speaking, we find larger projects for sale outside the city, and smaller projects in the city of Barcelona.
- Compared to a year ago we find more areas offering new developments, and not only in the first ring of suburbs around Barcelona. New developments are now coming on stream in radius cities like Mataró and Sabadell.
- In certain areas of the first suburban ring there is considerable competition between developments for the same customers.
- Prices increase between 10% and 30% after launch as sales progress, depending on the project
- 74% of buyers intend to use mortgage financing.
- The average age of buyers is 43 years.
- A significant number of buyers come from the city of Barcelona, especially for developments in Sant Just Desvern.
- In most areas outside the centre local buyers still dominate, but some projects are starting to attract foreign buyers.
- The rhythm of sales is very high, with between 8 and 10 flats sold per month.
- Looking to the future, the financial capacity of potential buyers in future is the key to understanding the market.
Resale market price trends
Comparing prices is difficult because no two homes are alike in the resale market, and prices vary considerably over time according to the characteristics of a property, in particular its location and condition.
That said, we have observed the following general price trends in the resale market:
- Barcelona, the trend is upwards with an average annual growth of 2% in the last four and a half years.
- Sant Cugat del Vallès is a special case because, when the crisis struck, exceptional conditions of supply and demand triggered a deep and prolonged crash in prices, in some cases 70% down, and way below fair value for a town like Sant Cugat. When the market bottomed out house prices in Sant Cugat recovered strongly, growing by approximately 67% per year, and are now 67% higher than they were four years ago.
- Sant Just Desvern is a small yet mature market where fluctuations tend to be more moderate. The annual increase of the last four and a half years has been 2%.
Barcelona and surroundings in future
Looking to the future, the key to healthy growth will be determined by the buying power of consumers based on economic growth and financing conditions, rather than speculation and price bubbles detached from the real economy, which are always unsustainable. Land prices are the key to avoiding bubbles. For healthy growth we need an efficient market for land, and effective urban planning that provides building land to satisfy demand and keep prices realistic.
Between the end of 2017 and 2018, a significant number of projects are expected to be marketed in Barcelona and in the surrounding area, including some reference-point projects that we hope will mean a step forward in the residential conception of the city. We believe Hospitalet de Llobregat will be one of the most active locations in the coming months, as it is home to a number of interesting projects coming to the market. Badalona, Sant Cugat del Vallès, and Sant Just Desvern will continue to maintain a high level of development with new projects coming on stream as others are sold out.
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