13 September 2017 – El Confidencial
Second-hand homes are the undisputed star of the Spanish residential market. Despite the fact that the volume of transactions involving second-hand homes plummeted following the burst of the real estate bubble, they now account for 8 of every 10 sales closed in Spain. In addition, more second-hand homes were sold during the first seven months of this year than between January and July 2008. The renewed appetite for these types of homes has resulted in an upwards rally in prices. In fact, over the last year, prices registered their highest increase for the last 10 years.
There are several factors behind this furore. Even though the construction of new properties has grown in recent months, it is not sufficiently voluminous to meet demand, which, having overcome the crisis and after emerging from its lethargy, now wants to purchase. Moreover, the gap in prices between both types of homes (new and second-hand) has led many buyers – including investors – to opt for second-hand homes.
According to data from the notaries, the square metre of a new build home is €569/m2 more expensive, on average, than of a second-hand dwelling. At the national level in June, the average price of a second-hand home amounted to €1,478/m2, whereas that of a new build residence stood at €2,047/m2 (…).
The sale of second-hand homes hit rock bottom in 2012 when 160,000 units were sold, compared with almost 450,000 in 2007. Nevertheless, with the exception of 2009 and 2010, more second-hand homes are always sold than new builds. In 2008, the first year after the bubble burst, the figures about equal. But, a definitive gap emerged again in 2015, to the extent that last year, 8 out of every 10 homes sold in Spain were second-hand.
Prices rise by 5% in one year
This buyer appetite has had an immediate impact on prices. During the month of August, prices rose by 4.9%, the greatest YoY increase in the last 10 years. As such, the average price per square metre now amounts to €1,708/m2, according to data from Fotocasa (…).
Once again, the behaviour has been very irregular throughout the length and breadth of Spain. There were significant increases in the Balearic Islands (16.2%) and Cataluña (11.6%), the only autonomous regions that saw prices rise by more than 10%. They were followed by price rises in the Canary Islands (5.6%), Andalucía (5.4%), Castilla-La Mancha (4.7%), Madrid (4.2%) and Extremadura (3%).
Nevertheless, we should not forget that the decrease in house prices from their peaks is still very significant across the vast majority of the country. The average price of second-hand homes in Spain has recorded a cumulative decrease of 42.2% since the peak of April 2007 (€2,952/m2). In this sense, 11 autonomous regions still record cumulative decreases of more than 40% compared to the maximum prices recorded nine years ago. They are led by La Rioja (-56.8%), and followed by Navarra (-53.8%), Aragón (-51.4%), Castilla-La Mancha (-51.3%), Murcia (-49.4%), Asturias (-46.8%), the Community of Valencia (-45.7%), Cantabria (-43.1%), Cataluña (-42.1%), Madrid (-40.9%) and Extremadura (-40.6%).
“Meanwhile, the housing market is registering levels of activity that we have not seen for 10 years, as a result of the improvement in the economy and employment, as well as of a return of confidence to the sector (…)”, explains Beatriz Toribio, Head of Research at Fotocasa. Nevertheless, Toribio points out that “despite the chunky growth in the number of mortgages, transactions and prices, the sector is still at much lower levels than during the golden years” (…).
General increases in Madrid and Barcelona
Madrid and Barcelona, two of the most active markets from a real estate perspective are by no means unaffected by the rise in the prices of second-hand properties. Prices rose in 19 of the Spanish capital’s 21 districts in August (…). In terms of the most expensive and cheapest districts, Salamanca is the most expensive for buying a home, with a price of €4,923/m2. It is followed by Chamberí (€4,681/m2), Centro (€4,453/m2) and Chamartín (€4,448 /m2). At the opposite end of the spectrum, Villaverde is the most affordable district for buying a second-hand home, with an average price of €1,518/m2.
Meanwhile, in Barcelona, house prices rose in seven of the 10 districts analysed by Fotocasa in August (…).
Original story: El Confidencial (by E. Sanz)
Translation: Carmel Drake