Growth in Spanish House Prices Stabilizes at 2%

This is the twelfth consecutive period to register a rise, the second in a row with an increase below 3%, following the 2.1% recorded in the previous quarter.

Gesvalt has published its latest Housing Report for the first quarter of 2024. The study is compiled using data from the company’s own Research Department and shows a 2% increase in house prices on the same period in 2023.

The figure represents the twelfth consecutive quarter with increasing house prices, although it’s also the second in a row where the rise has been below 3%, with the last quarter of 2023 recording 2.1%. As such, we are starting to perceive a stabilisation in house prices’ upward trend, following several periods of decline ever since the peak of 6.7% registered in the first quarter of 2023.

Prices have also increased by 1.8% compared with the previous quarter, bucking the trend of the last two periods, which saw declines of nearly 1%. This is another reflection of the fact that house prices are stabilising, with more moderate upward trends across the board. We have seen several periods of decline, driven by a drop in sales and purchases, which fell by 9.5% across Spain as a whole in 2023. The company believes this trend could become the norm over the course of the year, with slight fluctuations and perhaps more marked variations in certain territories.

So, the average house price stands at 1,566 €/m2, some 26.9% below the historical maximums, recorded back in the first quarter of 2008. This figure also means that an average-value property with a surface area of 90m², which would have been worth €138,520 last year, would currently cost €140,940 to purchase.

For the third consecutive quarter, there has been a general increase in house prices across all regions. For the tenth consecutive quarter, the Balearic Islands has the highest house prices of any Autonomous Community in Spain, at 2,859€/m2, ahead of the Community of Madrid at 2,546€/m2, and the Basque Country at 2,383€/m2. These three are the only regions which exceed 2,000€/m2. At the other end of the ranking, the only Autonomous Communities failing to reach average prices of €1,000 per square metre are Castilla La Mancha at €909/m2 and Extremadura at €873/m2.

Six Autonomous Communities See Growth Above 4%

This quarter has once again reflected uneven growth in house prices across Spain. Six regions have experienced growth of over 4%, with the island regions becoming the driving force behind rising prices in Spain.

The Canary Islands enjoyed the greatest increase, some 9.6% up to 1,693€/m2, followed by the Balearic Islands, at 9.1%. Some way behind comes the Valencian Community, which has experienced a 6.5% increase to place its average price at 1303 €/m2, Murcia, with a 5.5% increase and a price of 1,148 €/m2, and Cantabria, where prices have risen by 5.2% to hit 1,562 €/m2.

Meanwhile, the lowest increases were registered in Asturias and the Basque Country, both seeing a 0.7% rise to €1,266/m2 and €2,383/m2 respectively.

On a provincial level, the year-on-year increases were most notable in Santa Cruz de Tenerife (+13.0%), Las Palmas de Gran Canaria (+9.4%), the Balearic Islands (+9.1%) and Cadiz (+7.7%). Meanwhile, provinces with the greatest falls, below -1%, were Ciudad Real (-5.5%), Orense (-4.7%), Gipuzkoa (-2.4%) and Jaén (-1.4%). The provinces that record the highest prices, however, are still Gipuzkoa, the Balearic Islands, Madrid, Málaga and Vizcaya, all maintaining values above 2,000 €/m². On the other hand, just like in quarter four of 2023, there are some fifteen provinces with unit values below €1,000/m².

Spiking Rental Prices Continue

The decline in the number of home sales and purchases has resulted in a shift in demand towards the rental market, which is under increasing pressure, driving up prices. In the last quarter, six provinces experienced increases of over 15%, with the highest year-on-year variations coming in Segovia (+22.6%), Santa Cruz de Tenerife (+20.3%) and Cuenca (+18.4%). By contrast, only the province of Jaén showed a slight contraction of -0.4%.

An analysis of absolute figures shows Barcelona continues to be the province with the highest rental values, an average of 21.26 €/m²/month, followed by Madrid and the Balearic Islands, which this quarter reflect an average rental value of 17.75 €/m²/month. At the lower end of the ranking there are just two provinces with rental units below 5.50 €/m²/month – Jaén (5.13 €/m²/month) and Teruel (5.40 €/m²/month).

Falls in the Euribor, While Average Term of New Mortgages Drops

The Euribor closed February 2024 at 3.671%. Despite remaining 0.351 points below the figure published in the previous report, it was in fact 0.062 points higher than how it closed out January.

In year-on-year terms, it remains higher than the same period twelve months ago, with an increase of just over 0.1 points in February 2024, when the Euribor and interest rates were already high. These two indicators run in parallel and this sustained increase is causing a slowdown in the real estate market, directly affecting the number of sales and purchases and, even more markedly, the quantity of mortgages signed.

Meanwhile, according to the latest published data the average term of new mortgages has fallen to 24.2 years during the fourth quarter of 2023, maintaining its slight but continuous downward trend.

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