2023 Spanish Property Market Overview: Current Trends and Insights by CBRE
To understand the current housing market and how it influences the appraisal of properties for sale, it is necessary to comprehend some basic indices that evolve over time. Below, we will briefly explain what each one consists of and their current status.
Firstly, housing prices increase or decrease heterogeneously, varying by province. Specifically, we will focus on Costa Blanca, Costa Cálida, and Costa del Sol.
Based on housing prices, we classify provinces into three categories: active (where prices have increased above the average), moderate (with more subdued growth), and paused (with stagnant or even decreasing prices). In Costa del Sol, we find Málaga, which stands out prominently as an active province with an 8.6% growth, the highest in the country. On the other hand, we have Costa Blanca, which includes Alicante, a moderate province with a 5.4% growth. Finally, in ,0,Costa Cálida, the province of Murcia is in a paused state with a 0.4% growth.
The first index we present is the so-called "equilibrium index," which measures real estate tension. "Real estate tension" is the relationship between the housing stock (the Spanish housing inventory) and the volume of real estate transactions (buying/selling). In more active provinces, tension is higher than in others that are more moderate or paused. Currently, in Spain, the market is far from overheating, which is a positive indicator.
On the other hand, we have the affordability ratio. This index determines the balance between the average housing price and the appropriate debt capacity for its acquisition, considering the average income of employed citizens. As the costs of financing have been steadily increasing due to rising interest rates, the cost of mortgages also rises, increasing the risk of default. The province of Alicante has one of the highest affordability ratios in the country, which means greater effort on the part of families to manage mortgages and/or acquire a property due to financing costs.
In general, it has been found that in most Spanish provinces, there has been positive year-on-year growth (39), while only 13 have seen no changes or even a decline. While Alicante has a value of €1,487.98 per square meter, Murcia has a significantly lower price per square meter at €1,048.60. However, Málaga stands at €2,152.10 per square meter, boasting one of the highest property prices in the country.
In conclusion, the rise in interest rates has been one of the main drivers of the increase in housing costs, especially affecting families' ability to handle higher mortgages and potential buyers who see that acquiring a property is becoming more expensive due to costlier financing. While Costa del Sol, particularly Málaga, leads in demand due to its international projection and business appeal, areas like Murcia have experienced very little significant growth in housing costs, making them favorable for investment compared to more tensioned regions.
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