5 April 2018 – Expansión
The boom continues with an average price rise of 3.8% during the first quarter of 2018 / Rises in large capital cities and tourist areas boost house prices in a market that is still operating at several speeds. Nevertheless, Cataluña is showing signs of a slow down.
Madrid and Palma de Mallorca led the growth in house prices during the first quarter of the year, according to data published yesterday by the appraisal company Tinsa. Specifically, the city of Madrid saw price increases of 17% with respect to the same period last year, followed by the capital of the Balearic Islands (14.7%), Barcelona (11%), Pamplona (10.4%) and Logroño (10%). All of them contributed to an average increase in house prices across the country of 3.8%.
Despite the great motor that Madrid, many tourist areas and certain non-coastal cities represent, where demographic pressure is starting to push prices up again, the positive trend of the market as a whole is being weakened by the diminishing strength of Cataluña following the independence referendum on 1 October 2017. Whilst house prices in the Cataluñan capital rose by 20.6% during the third quarter of last year, that growth had moderated to 14.8% by the end of 2017 and to 11% by the start of this year.
This weakness corresponds to lower investment activity, due in part to a slowdown in tourism, as well as uncertainty, which has caused a delay in certain purchase decisions, such as the time it takes to sell a home (…).
Moreover, it is worth noting that whilst before house prices in Cataluña as a whole rose by 12.5%, now prices in the other three capitals are stagnating or falling, and prices in the region as a whole have slowed to an increase of 7.3%.
This situation is the opposite of what is happening in the Community of Madrid, where the increase in prices in the capital is driving demand out to towns on the outskirts. In this way, prices for the region as a whole are rising with similar strength to those in the city of Madrid (…).
The increases in the large capitals are not isolated, given that the rises are taking place in the most touristy areas, as well as in those areas where unemployment has decreased significantly. In this way, prices are rising by between 5% and 8% in capitals along the Mediterranean (only Gerona has seen its prices decrease), as well as in Andalucía and the Canary Islands, and in several cities in the Northern third of the peninsula (such as Vitoria, San Sebastián and Burgos); in the case of Sevilla, prices rose by 8.8% in Q1.
Nevertheless, within the real estate market as a whole, there are still many provincial capitals where house prices are falling, such as the case of Ciudad Real (where prices fell by -11.9% in Q1), followed by Cáceres (-9.2%), Guadalajara (-6.3%) and Lérida (-6.2%). Several factors explain those decreases, which are concentrated in the least populated areas and, which, therefore, have little weight on the overall market. Firstly, many of those cities have high levels of unemployment and the majority are experiencing population loss, which relieves pressure on the real estate market (…).
Original story: Expansión (by Pablo Cerezal & Juanma Lamet)
Translation: Carmel Drake