CBRE’s Global Living report on the housing market in 35 of the world’s most important cities asserts that house prices increased the most in Barcelona last year, up 16.9%, with Madrid not far behind in fourth place with an increase of 10.2%. This comes as a surprise to locals in the business.
Published annually by CBRE, an international real estate consultancy, the report looks at average property prices, house price growth, average prime property prices, average monthly rent and rental growth in 35 global cities and ranks them for each metric. Barcelona and Madrid were in the top five for both house price and rental price growth last year. You can see the full rankings at the bottom of the article.
Despite the reported increase in house prices in Barcelona and Madrid, the two are still relatively affordable compared to other cities in the ranking, with Barcelona in 21st place, and Madrid in 24th. That said, affordability might not look so good in a ranking compared to local incomes.
Barcelona and Madrid are less affordable when it comes to rents, in 11th and 18th place respectively. Barcelona was in fifth place for rental price increases last year, up 7.7%, and Madrid was in 2nd place up 11.1% behind Lisbon in first place up 20.9%
“As we approach the end of a decade long property market cycle, housing markets around the world are slowing down,” explains CBRE’s report by Jennet Siebrits, Head of Residential Research. “Some cities are further into the cycle than others, and this is reflected in our top 10 list for house price growth.
“Last year some of the best performing cities were New York, Los Angeles, Toronto, Vancouver, Sydney and Melbourne. With these markets now suffering from increasing affordability constraints, they have been pushed down the list making room for European cities where house price growth is still robust. There remains room for growth after the deep housing market downturn that followed the financial crisis. Dublin, Shanghai and Cape Town were the only 3 cities still in the top 10 for house price growth since the last report.”
Spain’s opaque housing market
The problem with all international housing rankings like this one from CBRE that compares Spain to other countries is that the source data is not very reliable when it comes to house prices in Spain. CBRE cites the Spanish Notaries’ Association as the data source, but in my experience the Notaries’ figures are highly volatile, and are revised significantly months later. The statistics provided by the notaries are user-unfriendly, which makes it difficult to delve into them and work out what’s going on, but they never seem to match the reality described by property professionals.
No other source I can find thinks that Barcelona house prices rose by 16.9%. According to data from Barcelona City Hall, house prices in terms of €/m2 (built) were up 4.5% last year to 4,182€/m2, admittedly with new house prices up 17.7% to 4,619€/m2, but the much bigger resale market was only up 2.7% to 4,120€/m2.
Reports from agents at the coal face of the property market in Barcelona tell a similar story of low or stable Barcelona house prices last year. Alex Vaughan of Barcelona-based agents Lucas Fox reports an overall increase of 1.4% vs 2017, though the key Eixample district segment rose even less, but just 0.5% “That’s closed prices,” explains Alex. “Obviously the market was much slower last year, especially prime. This year has started very well, with the number of offers close to where they were in 2017 but I would say people are now willing to pay 10% less than they were before October 2017.”
François Carriere, head of international agents Coldwell Banker in Spain, breaks down price changes by segment. “I think up to €600,000 they increased by between 5-7%. up to €1.2m prices were stable, but above €1.2m they were down 5% last year.”
CBRE’s report is very professional and well put together, but Spain’s opaque housing market means it can’t be ranked reliably against other countries, where housing markets are more transparent. So in my opinion, rankings like these often give people a misleading impression of what’s going on in Spain. Anyone reading CBRE’s Global Living report 2019 could be forgiven for thinking that Barcelona’s housing market is on fire, but that’s not the case any more.The opaqueness of Spain’s housing market, is one good reason to think twice before investing in Spanish real estate. When it comes to understanding the housing market and pricing, you may find yourself all at sea in Spain, which increases the risks you take.