19 August 2018
The increase in the price of housing has been especially pronounced in the Spanish archipelagos.
The real estate sector is already beginning to show signs of heating up on some levels. Many indicators are still below those registered during the real estate boom, but others are already reaching record highs, and not only in Madrid and Barcelona.
In fact, of the 16 localities and municipalities that are already reaching new record highs, 11 are outside of these cities and on the coast.
Sant Just Desvern (Catalonia); Retiro, Salamanca, Centro and Chamberí (Community of Madrid); Benhavis (Andalusia); Calviá, Ibiza, Palma de Mallorca, San José and Santa Eulalia del Rio (Balearic Islands); Gran Alacant (Comunidad Valenciana) and Adeje, Arona, Granadilla de Abona and San Bartolomé de Tirajana (Canary Islands) are the areas where prices have already exceeded the records set during the pre-crisis real estate boom, according to data published by Idealista.
The residential market on the Spanish coast is experiencing a gradual recovery, but there are already cities that have returned to pre-crisis levels. The locations that first began to stabilise after that period are already demonstrating intense growth in prices and new housing construction activity.
However, there are also markets that are still showing signs of the bursting of the bubble, which can be seen in the oversupply of that time and the current weak demand, as Tinsa points out in its report on the Spanish residential market on the coast.
In one year, the areas that were in a situation of moderate adjustment have been reduced by half, from 27.6% to 11.2%. On the other hand, 36.5% of provinces and municipalities near the coast already are in the process of “clear recovery.”
Regarding the trend in prices, statistics from bank appraisals in the first quarter of 2018 reflect positive year-on-year growth in 104 of the 147 coastal municipalities that have available data, compared to 84 that showed positive growth in last year’s report.
Algeciras, Barbate, Cantabria and Asturias: the areas where the recovery is taking the longest to appear
The main signs of a recovery in the market already occurred three years ago, but 2018 has been a year for setting new records, with prices reaching highs in many areas, particularly in the Spanish archipelagos.
There are also other areas, such as the Costa del Sol, the north and south of the provinces of Alicante, the Maresme and around Barcelona. In recent months, some markets have begun to awaken to mainly national demand, where there have been signs of improvement.
On the other hand Algeciras, Barbate, Cantabria and Asturias are the areas where this recovery is taking the longest to arrive.
Need for new housing
The stock of new housing that remained after the outbreak of the crisis also beginning to be absorbed. The stock is at an average level in 47.7% of the areas, although in half of those the supply could be absorbed in the short term, according to Tinsa.
Among the locations where it is practically non-existent (19% of the areas), Ibiza stands out along with the Conil and Tarifa (Cádiz) coasts; Fuerteventura, Lanzarote and south of Gran Canaria, as well as the Basque coast.
It is natural that this has been accompanied by an upturn in the activities of developers. After years of almost total paralysis, where construction was conspicuously absent due to weak demand and overcapacity, developers once again began to increase their operations in specific enclaves of the Alicante coast and Costa del Sol.
The market has been recovering slowly. In half of the areas analysed (50.8%), Tinsa noted that the construction of new housing projects has begun, compared to 36.2% in last year’s report.
Original Story: Vox Populi – David Cabrera
Photo: Teresa García
Translation: Richard Turner