Record New Build House Prices in Spain Rise

Spain's new build house prices surpass €2,000/m² for the first time since 2008, fueled by growing foreign demand, registrars reveal.

In a noteworthy development, registrars have reported that the annualized average price of both new and used housing in Spain has surpassed the €2,000 per square meter threshold for the first time since the financial crisis of 2008. The trajectory of the average house price in Spain is not merely ascending; it is accelerating at a pace that would make even the most seasoned economists raise an eyebrow. According to the Real Estate Registry Statistics from the Association of Registrars, the average house price surged by 2.9% in the second quarter of 2024, reaching €2,057 per square meter, a significant leap from the modest 0.8% increase observed in the preceding quarter. 

This upward momentum can be largely attributed to a robust 3.8% rise in used housing prices, while new builds experienced a more tepid increase of 0.3%. This marks the fourth consecutive quarter of price escalations, a trend that seems to defy the gravity of economic caution. The annualized results for the past year reveal a more stable pattern, with the average house price in Spain now standing at €2,004 per square meter, reflecting a year-on-year increase of 2.6%. This figure represents the highest average since mid-2008, as corroborated by historical data from registrars. 

In a striking turn of events, new housing prices have set a record high at €2,194 per square meter, while used housing prices have reached €1,958 per square meter, the highest levels recorded since late 2008. It is noteworthy that new housing transactions account for a mere 20% of the market, often involving sales agreements made up to two years in advance. Consequently, the fluctuations in used housing prices are generally more reflective of the current market dynamics.

Examining the geographical disparities, the Balearic Islands lead the pack with the highest average house prices at €3,534 per square meter, followed closely by Madrid (€3,390/m²), the Basque Country (€2,928/m²), the Canary Islands (€2,528/m²), and Catalonia (€2,500/m²). In stark contrast, the most affordable housing options are found in Castilla-La Mancha (€876/m²) and Extremadura (€813/m²), the only regions where average prices dip below the €1,000 mark. 

At the provincial level, the Balearic Islands again take the lead with average prices of €3,534/m², followed by Guipuzcoa (€3,423/m²), Madrid (€3,390/m²), Barcelona (€2,869/m²), and Vizcaya (€2,925/m²). Conversely, the most economical options are located in Ciudad Real (€675/m²), Cuenca (€687/m²), Caceres (€774/m²), and Teruel (€780/m²). Registrars have noted that 38 provincial capitals have experienced positive year-on-year price increases, with San Sebastian topping the list of the most expensive cities at €5,554/m², followed by Barcelona (€4,441/m²), Madrid (€4,207/m²), Palma (€3,471/m²), and Bilbao (€2,989/m²). On the flip side, the most affordable cities include Zamora (€1,014/m²), Ciudad Real (€1,062/m²), and Jaen (€1,120/m²).

However, amidst these rising prices, the number of home sales has taken a downturn. Between April and June, registrars recorded 146,273 property sales, reflecting a 3.4% decline from the previous quarter. This trend continues the downward trajectory observed in the latter half of 2023, albeit at a more tempered rate. New housing sales amounted to 29,175, marking a 6.6% decrease, while used housing transactions totaled 117,098, indicating a 2.6% quarterly decline. Over the past year, 567,784 homes were sold, representing a 1% drop from the 573,494 transactions recorded in the same period the previous year, thus maintaining the overarching downward trend despite a relatively better quarterly performance.

In terms of housing mortgages, the number of transactions plummeted to 108,910 in the first quarter of 2024, a staggering 14.3% decrease compared to the previous quarter, which had witnessed a 21.1% surge. Registrars have indicated that, as anticipated, the percentage of mortgages taken out on registered home transactions has significantly decreased over the last quarter, specifically by 8.1 percentage points, now standing at 63.8%, aligning with the proportions recorded throughout 2023.

Interestingly, foreign demand for housing has seen an uptick, reaching 14.8% of total transactions, an increase of 0.6 percentage points from the previous quarter and well above the historical average of 12% since 2014. In absolute terms, the number of transactions by foreigners has risen, surpassing 21,700 compared to just over 21,500 in the previous quarter. The British continue to dominate the foreign buyer market, accounting for 8.4% of transactions, followed by Germans (7%), Moroccans (6.1%), Romanians (5.3%), and French (5.2%). Notably, 13 autonomous communities have reported an increase in their share of foreign demand, with the highest percentages recorded in the Balearic Islands (33.4%), Valencia (28.8%), Murcia (23.6%), Catalonia (16.1%), and Andalusia (13.7%). 

While the Spanish housing market exhibits a complex interplay of rising prices and declining sales, the persistent foreign interest adds an intriguing layer to the evolving narrative.