Anticipa: House Prices in Madrid & Barcelona Return to their Peaks of the Real Estate Boom

11 November 2018 – El Confidencial

The (real estate) recovery is really heating up. House prices in Madrid are on the verge of returning to their peaks of 2007. What seemed impossible, is now becoming a reality. That is according to a report from Anticipa Real Estate, which forecasts two-digit increases in house prices in the Spanish capital this year and next. Specifically, it predicts that homes will become more expensive by 10.2% in 2018 and by 11.5% in 2019, rises that are twice as high as the percentages that experts consider to be sustainable.

House prices have already been growing at rates of 10% during the last two quarters, according to the Repeated Sales House Price Index, prepared in accordance with the Case & Shiller methodology from the United States applied to Spain, which analyses repeat sales of the same homes. In other words, they are rising at double-digit percentages reminiscent of those recorded at the height of the real estate boom a decade ago.

Despite that, both property developers and banks are insisting that the market is very different to the one seen more than ten years ago and they categorically rule out that we are facing a similar situation to then. On the one hand, access to financing remains very restricted for solvent clients, whilst the recovery in prices is very uneven across the country. Whilst in the cities (and in certain neighbourhoods), prices are skyrocketing, in others, prices are still decreasing.

Although on average, by the end of 2019, house prices in Spain will be 15% below the peaks recorded in 2007, according to the report from Anticipa Real Estate, there are some hot spot areas where those prices have already been exceeded. In Cataluña, another of the hot spots in the Spanish market, increases of around 9% are expected next year and that despite the delicate political situation in Cataluña, which has had a direct negative impact on the real estate market – in Barcelona -, which, until a year ago, was performing extremely well in terms of transactions and prices.

Madrid stands out from the rest of Spain, with an evolution in terms of residential prices that has caused the first alarm bells to start sounding. In certain neighbourhoods, such as Chamartín, Chamberí and Salamanca, second-hand homes now cost the same as they did ten or twelve years ago, whilst in others such as Arganzuela, Centro, Moncloa and Tetúan, prices are close to exceeding those levels. In others, where prices are still well below their peaks of the bubble, the market is rising at rates of 20%, rapidly reducing the gap with respect to 2008.

They are peripheral areas of the city towards which price rises are moving like an oil slick. And that is because prices, both to the purchase and rental markets in the centre of the city have reached such prohibitive levels that much of the demand is moving en masse to more affordable areas, resulting in significant upward pressure on prices.

According to the latest data from Tinsa, in Vicálvaro, Ciudad Lineal and Villaverde, house prices have risen by more than 20% in the last year, compared with rises of 8.5% in Chamartín and 13% in the district of Salamanca. Meanwhile, the municipalities of Barcelona, such as L’Hospitalet de Llobregat, Castelldefels, Esplugues de Llobregat and Sabadell, are experiencing a similar phenonemon with increases of more than 15% (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Registrars: House Prices Rose By 5.7% In 2016

15 February 2017 – Expansión

House prices rose by 5.6% in 2016, according to data published yesterday by the College of Registrars. In QoQ terms, this means that homes became 1.9% more expensive during the last three months of the year, whereby recording their ninth cumulative quarter of increases. These findings come from the Index of House Prices for Repeated Sales (IPVVR), prepared using the Case-Shiller methodology, which analyses only those homes that have been sold at least twice during the period under analysis, i.e. since 1995. This methodology is considered to be one of the best ways of measuring the true evolution of house prices and is the benchmark that is used in the USA.

The other key finding from the Registrars’ statistics is that the volume of homes sold increased by 13.9% last year, to 403,742, up by 49,205 compared to 2015. In this way, house sales exceeded the psychological barrier of 400,000 transactions, something that has not happened since 2010. (…).

The data from the College of Registrars in terms of house sale volumes is almost identical to that published last week by Spain’s National Institute of Statistics (403,900 operations and an increase of 13.7%). As such, the really interesting findings from the Registrars’ statistics relate to prices.

For example, the index shows that since the peaks of 2007, average house prices have recorded a cumulative decrease of just over 25%. By contrast, with respect to their minimum levels (recorded in 2014), average house prices have registered a cumulative increase of 13.3%. House prices rose by 6.6% in 2015 and by 2.55% in 2014.

Prices return to 2004 levels

Although the Registrars do no specify the average cost of homes per m2 in absolute terms, they do report that house prices are now at similar levels to those recorded in the middle of 2012 and at the end of 2004 (…).

These figures “seem to indicate the future trend to the extent that it seems reasonable that house prices will continue to grow, normally by more than 1% per quarter, giving rise to YoY increases of around 5%”. In other words, house prices are expected to continue to grow at rates similar to last year. (…).

Increases across the board

The breakdown in house sales shows that price increases were recorded in every autonomous region in 2016 with respect to 2015. The greatest rises were observed in the Balearic Islands (+30%), Cataluña (+21.1%) and Asturias (+17%). Moreover, growth rates reached doubt digits in twelve autonomous regions. For example, the rate in the Community of Madrid was 13.85%, in line with the national average.

Forty-nine of Spain’s 52 provinces have now left price decreases behind. In fact, the sales volumes of second-hand homes increased in every province in 2016, led by Madrid (58,752 transactions), Barcelona (46,415), Alicante (29,688), Málaga (26,436), Valencia (21,963), Baleares (13,811), Sevilla (12,900), Murcia (11,972), Las Palmas (11,272) and Cádiz (10,288).

The fourth quarter of the year closed with the highest percentage of purchases by foreigners in 2016, representing 13.57% of the total, giving rise to the third highest figure ever. (…). During the year as a whole, overseas buyers accounted for 13.25% of the market, with almost 53,000 purchases.

Original story: Expansión (by Juanma Lamet)

Translation: Carmel Drake