9 October 2018 – ABC
Whilst most Spanish provincial capitals have reached what the experts define as “a turning point” with the stabilisation of house prices, Madrid is still the most dynamic city in the whole country. It is leading the house price rises once again with increases of 15.6% in Q3 with respect to the third quarter of last year. That rise in value reflects the tensions that demand for homes in the Spanish capital is exerting on certain areas. The scarce supply of new build homes is not helping to balance a panorama where the pressure on house prices is now moving towards the peripheral neighbourhoods. Some areas are recording price increases of more than 20%, well above those seen even in the traditionally most sought-after districts. All of the districts, without exception, have seen an increase in their price per square metre. Of the 21, only three saw price rises in the single-digits – Usera, Chamartín and Villa de Vallecas-. In this context, the average price in the Spanish capital now amounts to €2,876/m2.
That is according to the latest local market report on finished housing – new and second hand – published by the appraisal company Tinsa at the end of the third quarter. In it, Madrid ranks as the third most expensive provincial capital to buy a home after Barcelona (€3,383/m2) and San Sebastián (€3,151/m2), both with more discrete YoY growth rates. Despite the warning that the consecutive increases generate, a priori, the capital is still a long way from the maximums that it reached in the third quarter of 2007 (27.6% lower), which marked the start of the crisis. The real estate situation has changed little since the middle of the year, although the trends that some experts, such as Pedro Soria, Commercial Director at Tinsa, were indicating in June have been confirmed: high prices in the city centre are pushing buyers to focus outside of the M-30.
The furore to purchase properties is still defined by a striking fact: it only takes 2.6 months to sell a property in Madrid at the moment. That period is still the lowest in Spain, even though it increased by one tenth with respect to the second quarter. Even with property developer activity below what the sector considers healthy for the real estate sector, demand for second-hand products is extremely high. And it is not exactly a favourable scenario for buyers. One piece of evidence that a major problem is starting to emerge in terms of access to housing in the capital is in the financial effort that families are having to make to live in Madrid. This has exceeded what is considered to be the “sustainable” limit. Those that have purchased a home in the last quarter are having to spend 26.1% of their gross household income (before taxes and other deductions) to service the first year of their mortgages. The national average stands at 17.2%. The experts consider that the red line, which has always recommended spending no more than one quarter of a household’s income on the mortgage, is now being passed. In districts such as Arganzuela, which has become one of the most attractive areas of the capital, household’s financial efforts now amount to 27.6% and the figure reaches 41.5% in the case of Salamanca neighbourhood. Once again, house prices in that area are the most expensive in Spain, at €4,762/m2. Chamberi is ranked in third place, after the Barcelona neighbourhood of Sarrià-Sant Gervasi, with €4,521/m2 (…).
The most expensive municipalities
The municipalities that generate the most interest include Pozuelo de Alarcón, which registers the highest price of €3,017/m2, followed by Alcobendas, at €2,847/m2 and Majadahonda, at €2,537/m2. By contrast, the municipalities of Arroyomolinos and Aranjuez registered the lowest prices: €1,337/m2 and €1,446/m2, respectively, of those analysed by the appraisal company (…).
Original story: ABC (by Adrián Delgado)
Translation: Carmel Drake