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July 6, 2016

Has real estate in Spain reached its lower limit?

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Has real estate in Spain reached its lower limit?

What the cost of real estate in Spain has reached its lower limit is a fact, as the price of second-hand real estate in Spain finished the second quarter of 2016 with prices falling by 1.4% and, therefore, stood at around 1.531 € / m2, which was the lowest level since the crisis began, according to the latest housing price index by Internet portal Idealista.

 

Despite the fact that the minimal increase in property prices in Spain was recorded in the first three months of 2016, the reality is that the price of objects in the second-hand market had reduced during the 25 of last 26 quarters. But it seems that we can now say that real estate prices finally “have landed".

 

Only large cities have avoided this trend of decline in property prices in Spain. After reaching their lows, cities such as Barcelona, ​​Madrid and Valencia have registered an increase by 19.5%, 6.4% and 6.1%, respectively.

Fernando Encinar, the head of research department of the website Idealista, noted that "although the rate of increase has slowed in major markets, the upward trend persists and we can still talk about the recovery of the real estate market at two speeds: prices continue to fall in the domestic inside markets of the country without finding a high demand, but a clear trend to increase real estate prices is to observe in places like Barcelona, ​​Malaga or Madrid."

 

In fact, only four regions of the country recorded during the second quarter of 2016 an increase in housing prices in Spain. By provinces, the number of those in which prices have risen, has been only 6 of the total of 50, while in the 16 provincial capitals real estate prices dropped.

 

In addition, Fernando Encinar confirms that "in the coming months the Spanish property market will be affected not only by the political situation in the country, by the measures taken in the construction of residential homes, but also by all measures that affect the mortgage lending, as well as creating new jobs," and also notes that "a moderate increase in real estate prices in major cities will not stop the buying and selling transactions, when the employment situation and the issuance of mortgage loans will continue their improvements."

 

In fact, among the autonomous regions of Spain, four recorded increases in property prices this spring: the largest increase occurred on the Balearic Islands, where landlords require 0.7% more than three months ago, followed by Andalusia, where prices rose by 0.2%, Madrid (0.1%) and the Canary Islands (0.1%). All other autonomous regions have seen a decline in real estate prices, led by Castilla-La Mancha (-4.8%) which is followed by Aragon (-2.5%), Murcia (-1.8%) and Extremadura (-1.7%).

 

Meanwhile, Euskadi (2,526 euros / m2) remains the most expensive Spanish autonomy regarding the purchase of a residential property, followed by the Community of Madrid (2,349 euros / m2), the Balearic Islands (1,899 euros / m2) and Catalonia (1,800 euros / m2). Castilla La Mancha (900 euros / m2) is on the opposite side of the classification, as well as Extremadura (931 euros / m2) and Murcia (1,016 euros / m2).

 

With regard to the capitals of the provinces of Spain, the largest increase was recorded in the capital of Lleida (2.6%), followed by Toledo (2.2%) and Pontevedra (1.7%). By contrast, Palencia and Albacete are the capitals of the provinces which were most affected by the fall in property prices in Spain, with declines by 3.6% and 3.5%, respectively. They are followed by Huesca (-3.1%), Alicante (-2.9%) and Huelva (-2.7%).

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