House Prices Rise By 10%+ In Most Exclusive Neighbourhoods

5 April 2016 – Expansión

Changing trend / Madrid and Barcelona are leading the recovery in the residential market, with house price increases of 9.2% and 7.5%, respectively during Q1 2016. The appraisal value of homes is now on the rise in every district of both cities.

(…). According to statistics from the appraisal company Tinsa, the value of residential properties increased by 1.4% during the first three months of 2016, with Barcelona and Madrid leading the charge.

The average appraisal value of (unsubsidised) homes per m2 in Barcelona amounts to €2,551/m2, which is 19% more expensive than the average in Madrid (€2,142/m2). This gap between the two cities has a simple explanation: not only have house prices been rising significantly faster in Barcelona than in Madrid, but also the Catalan capital has a higher population density than Madrid, which affects supply and demand, resulting in a higher degree of concentration. Moreover, barely any new residential properties are being constructed in Barcelona. (…).

The evolution of house prices in Madrid and Barcelona varies by neighbourhood. House prices rose in all 10 districts of the Catalan capital during Q1 2016, without exception and, for the first time, they also increased in all 21 Madrilenian districts. That has not happened since the real estate bubble burst.

The ranking

The highest price increases were concentrated in Barcelona. The two districts where average prices rose by the most were Les Corts (13.5%) and Sants-Montjuïc (12.2%). They were followed by the district of Salamanca, Madrid’s main real estate district, with an increase of 11.8%.

With an average price of €3,597/m2 and despite the heterogeneity of the neighbourhoods that comprise it, Salamanca is the district with the second highest prices of all of those analysed by Tinsa, behind only Sarrà-Sant Gervasi, which has an average price of €3,671/m2 (5.8% higher than in 2014). (…)

According to calculations from the consultancy firm Knight Frank, prices are going to rise by between 5% and 10% in prime areas in 2016, especially in five areas of the Madrilenian capital, namely Salamanca, Jerónimos, Chamberí, Justicia and El Viso. (…).

In Madrid, the most expensive districts after Salamanca are Chamberí (€3,444/m2 for subsidised homes, up by 5.4% compared with Q1 2015), Retiro (€3,270/m2, up by 4.3%), Chamartín (€3,312/m2, up by 1.7%) and the Centro, which has exceeded the €3,000/m2 threshold once again (€3,014/m2, up by 3.7%). All of the others sit below this psychological barrier, such as for example Moncloa-Aravaca (€2,793/m2 and 6.9%) and Arganzuela (€2,697/m2 and 8.5%).

The cheapest areas

The cheapest areas in Madrid are Villaverde (€1,232/m2), followed by Puente de Vallecas (€1,307/m2), Usera (€1,398/m2) and Carabanchel (€1,531/m2).

Average house prices will increase significantly in the Madrilenian capital during 2016, according to predictions by real estate analysts.

In Barcelona, Nou Barris is the district where house prices are lowest (€1,752/m2), followed by Horta Guinardó (€2,007/m2) and Sant Andreu (€2,105/m2). They are the only three places in Barcelona where prices are lower than the average price in Madrid (€2,142/m2), however, as is always the case in a market as fragmented as the housing sector, each area has its own micro-market. (…).

In any case, the forecasts are promising, in general terms. “In terms of both the number of transactions and prices, there has been a certain rebound effect following the collapse of the market that had not been seen for many decades. Now we need to wait for the stabilisation of the market, for similar data to that seen last year”, says Jorge Ripoll, Director of Research Services at Tinsa.

For the upwards trend to be maintained, the growth forecasts must be met and the labour market must improve. The other factors are already working on autopilot, at least in Madrid and Barcelona.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake

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