INE: House Prices Record Largest Increase Since 2007

11 December 2015 – El País

As the year end approaches, house prices in Spain are showing the most significant signs of recovery since the end of 2007, when the real estate bubble burst and prices began their downwards fall. Property prices increased by 4.5% during the third quarter of the year with respect to the same period in 2014, according to the House Price Index, published on Thursday by Spain’s National Institute for Statistics (INE). In this way, the real estate sector leaves behind the significant price decreases of the last six years and heads into 2016 with six consecutive quarters of increases. Between October and December 2007, which saw the last major increase in the series, prices grew by 5.7%.

Whilst, on average, the increase amounted to 4.5%, the price rises varied slightly by house age. New builds have now stopped increasing – they rose by 4.3% between July and September, i.e. by six tenths less than during the previous quarter – , whereas second-hand homes accelerated their increase, with price rises of 4.5%, i.e. five tenths above the figure recorded in the previous quarter. (…).

Nevertheless, the current situation in the real estate market, still requires prudence. “Although the general price increases that we are seeing across all autonomous communities could lead to euphoria, in reality there are still many parts of Spain where demand continues to be weak and where there are large pockets of homes for which no buyers can be found, and which therefore do not count for the official statistics. We recommend caution and common sense to all our property owners in this situation; they should not get carried away by excessive optimism without first analysing their local market”, advises Fernando Encinar, Head of Research at the portal Idealista.

The technicians at Fotocasa are of the same opinion. “The large discounts on house prices have come to an end, but that does not mean that prices have bottomed out”, says Beatriz Toribio, Head of Research at the real estate portal. In her opinion, there will be fluctuations over the next few months “characteristic of the normalisation that is happening in the sector”. “It will become more apparent that the real estate sector is recovering at two-speeds, depending on the region”, she adds.

Prices in the majority of the autonomous regions increased during the third quarter of 2015, with the Balearic Islands (8.4%), Madrid (6.9%) and Cataluña (6.1%) leading the ranking. By contrast, the smallest increases were seen in La Rioja and Aragón (0.9%) and País Vasco (1%). Fotocasa’s real estate index has been registering continuous YoY price increases for several months in regions such as Cataluña, Madrid and the Balearic Islands.

This recovery in prices is much more apparent in major cities, such as Barcelona and Madrid, where prices have been increasing in almost every neighbourhood for several months. By contrast, in Castilla la Mancha and Extremadura, we are still seeing YoY price decreases of 5%.

Original story: El País (by Sandra López Letón)

Translation: Carmel Drake