Tinsa: House Prices Fell by 1.7% in Barcelona & Rose by 4.5% in Madrid in Q4

30 December 2017 – Expansión

The real estate market is continuing on the path to recovery, but it has encountered an unexpected obstacle: “the process” (‘el procés’ in Catalan). In fact, the instability generated by the independentist challenge in Cataluña caused a slow down in the rate of growth that had been seen in both Cataluña and Barcelona until September, when the Catalan capital was leading the reactivation of the sector.

The path that Madrid and Barcelona had been following together diverged in the last quarter of 2017 when house prices in Barcelona decreased by 1.7% compared to the previous quarter, whilst in the Spanish capital, they rose by 4.5%, according to the Local Markets Index compiled by the appraisal company Tinsa. That figure represents the first decrease in the Catalan capital since Q2 2016.

“The political situation had a negative impact on house prices in Barcelona during the final quarter (of 2017)”, explained Jorge Ripoll, Director of Research at Tinsa. According to his explanations, “we are seeing a build-up of demand, primarily amongst investors, which has now started to spread to other buyer profiles”.

The quarterly decrease in Barcelona was concentrated in some of the districts that have some of the highest prices, such as Ciutat Vella (which saw a decrease of 5.8%), Les Corts (-5.5%) and Sarrià-Sant Gervasi (-1.1%); and they were not offset by the increases recorded in other neighbourhoods, such as Nou Barris (4.6%) and Sants-Montjüic (4.2%). Meanwhile, the growth in Madrid was boosted by significant increases in the districts of Chamartín (8.4%), La Latina (7.9%) and Carabanchel (6.9%).

This data means that Madrid outperformed Barcelona in terms of cumulative growth over the course of the year. In this way, the Spanish capital went from a YoY increase of 15.5% in Q3 to 17.1% in Q4, the highest of any of the provincial capitals. By contrast, the YoY increase in Barcelona moderated from 20.6% in Q3 to 14.8% in Q4, making it the second-placed municipality. In the Spanish capital, the most significant YoY increases were recorded in the following districts: Centro (21.1%), Salamanca and Retiro (both 17.6%); whilst in the Catalan city, prices soared in Sants-Montjüic (26.5%) and Sant Martí (24%).

The pull of the country’s two largest cities meant that house prices in Spain rose by 4.2% last year, accelerating significantly with respect to the 0.6% recorded in 2016 to reach an average price of €1,264/m2. This represents “moderate growth” according to Ripoll, who highlights that 2017 marked “the start of the recovery”.

Besides Madrid and Barcelona, the cities that recorded the highest price rises were Palma de Mallorca (13.7%), Pamplona (12.5%), Burgos (8.8%) and Vitoria (8.2%). In total, 30 of the 49 provincial capitals analysed in the study recorded positive growth. They also included important urban nuclei such as San Sebastián (6.1%), Sevilla (5.9%), Alicante (5.7%), Málaga (4.5%) and Valencia (3.9%). Of the 19 provincial capitals that recorded negative figures, the most notable decreases were recorded in Bilbao (-3.5%), Vigo (-0.6%) and Zaragoza (-0.8%), although Ciudad Real (-12.6%) recorded the worst result.

The decrease in house prices in Barcelona during the fourth quarter means that the Catalan capital was knocked off of its podium by San Sebastián as the most expensive town in Spain per square metre. In this way, the average house price in the Donostiarra city amounts to €3,231/m2. Meanwhile, the average house price in Barcelona amounts to €3,129/m2, and so, the sizeable gap – of approximately 20% – was maintained with respect to Madrid, where appraisers estimate that the average house price amounts to €2,601/m2 (…).

In terms of the effects that the Catalan crisis may have on the performance of the sector over the medium-term, Ripoll highlights that if the uncertainty experienced over the last quarter is prolonged, the negative evolution in Barcelona “may become endemic and result in a contraction”. Moreover, “we cannot rule out that” that phenomenon “will affect the rest of Spain” (…).

In this way, the average price of €1,264/m2 represents a return to the levels last seen in Q3 2013 and means that prices have decreased by 38.3% on average with respect to the historical maximum reached in 2007 (…).

Original story: Expansión (by Ignacio Bolea)

Translation: Carmel Drake

Madrid & Barcelona: Drivers Of The Housing Mini-Boom

4 January 2016 – Expansión

The housing market is now in full recovery mode, driven by the improving labour market and access to credit. House prices rose by 1% in 2015, which represented the first year of positive growth following seven years of decreases. Specifically, the average price per square metre increased by 1% between Q4 2015 and the same period a year earlier, according to Tinsa’s Local Markets Index. This put an end to the decreases seen following the burst of the real estate bubble during which time house prices decreased by 40.7%, compared with their levels in 2007.

According to Tinsa’s report, this 1% increase was driven by a miniboom in the large urban markets of Barcelona and Madrid, which accounted for the majority of the overall upward swing, together with other smaller cities such as Badajoz and Ávila. Thus, the Catalan capital recorded a 8.7% increase, whilst prices in Madrid rose by 3.8%. Significant increases were also registered in Badajoz (5.7%), Ávila (4.3%), Ciudad Real and Cuenca (3.3% in both cases) and Palma de Mallorca (2.2%).

According to the experts, several factors have led to the relatively sharp rise in house prices in these areas, such as the decrease in the volume of stock and the increase in demand. On the other hand, these areas have fewer remaining unsold homes, which means that demand is pushing prices up much more quickly. Unsurprisingly, Madrid is one of the most liquid markets in Spain, according to Tinsa, since it only takes 7.2 months, on average, to sell a home in the province, compared with 10.2 months for Spain as a whole. In addition, Madrid and Barcelona are both highly attractive areas, with demand from overseas savers and other citizens moving from the rest of Spain and overseas to work in the two cities.

Both areas have also seen a marked adjustment in terms of prices in recent years. In 2007, locals in Barcelona used to have to spend 36% of their average incomes on mortgage repayments, making it one of the most expensive cities in Spain; now, they have to contribute just 22% of their salaries, in line with the national average. In Madrid, that figure is one point lower (at 21%) and it only takes 5.3 years of salary to acquire an average home there, compared with 5.9 years for Spain as a whole.

Nevertheless, this is not the case in all of Spain’s large capital cities. Valencia recorded timid growth of 0.6% in 2015, whilst prices in Sevilla fell by 0.3%. The decreases amounted to 1.6% in the case of Bilbao, to 4% in Zaragoza and 6.7% in Murcia, still heavily affected by the surplus stock.

The striking variations between Spain’s major capitals is also reflected by the marked differences that exist between the different types of market in Spain, given that the majority of the country is still experiencing price decreases, or at best, price stability. That is one of the reasons why Tinsa prefers to talk about “a trend towards price stabilisation, which will be consolidated over the coming year”, rather than a general upturn in prices. (…).

Original story: Expansión (by Pablo Cerezal)

Translation: Carmel Drake