Spanish Property Market Continues to Ascend: 0.9% Growth in Third Quarter of 2023

In a testament to its enduring allure, Spain’s property market has shown resilience, with prices of used homes climbing by a commendable 0.9 per cent in the third quarter of the year.

According to the latest idealista price index, this increase brings the average square metre price to €2,007.

Impressively, over the last year, prices have surged by 7.5 per cent.

Why is this happening?

Francisco Iñareta, spokesperson for idealista, sheds light on this phenomenon. “It’s not just about reduced sales or increased financing costs; one of the primary drivers shaping the real estate landscape right now is the scarcity of homes available for sale.”

“This issue is widespread across the country and is exerting upward pressure on prices,” he explains.

Moreover, a significant portion of the demand is from highly qualified individuals with substantial resources, reducing their reliance on financing. Recent official data reveals that more than half of all property transactions occur without any form of financing.

Additionally, idealista’s data suggests that the majority of those seeking to buy a home already own one, simplifying the process and cutting down on financial expenses. Coupled with strong demand from foreign buyers, particularly in coastal and island regions, the housing market is experiencing consistent growth, with certain dynamic markets like Madrid, Palma, San Sebastián, and Málaga reaching historic highs, though a stabilization trend is emerging.

A Tale of Two Cities: Capitals That Rise and Fall

While most Spanish cities are witnessing growth, a dozen capitals have experienced slight declines in housing prices during the last three months. Leading the downturn is A Coruña (-1.5 per cent), followed by Vitoria (-1.2 per cent), Pamplona (-1.2 per cent), Salamanca (-0.9 per cent), Cuenca (-0.8 per cent), and Murcia (-0.8 per cent).

On the flip side, large markets have seen sellers’ expectations soar. Malaga tops the charts with a remarkable 4.3 per cent increase, trailed by Palma (3.2 per cent) and Alicante (2.9 per cent). Meanwhile, Madrid, Barcelona, and Bilbao have experienced a more modest 0.6 per cent growth, while Seville has remained steady at 0.2 per cent.

The most notable surges have occurred in Santa Cruz de Tenerife (8.7 per cent), Huesca (7.5 per cent), Avila (5.6 per cent), and Almería (5.5 per cent). In September alone, eight cities reached historic price highs: Madrid, Melilla, San Sebastian, Cadiz, Palma, Pontevedra, Málaga, and Santa Cruz de Tenerife.

City Rankings and Regional Trends

Unsurprisingly, San Sebastian reigns as the most expensive Spanish capital, with an average price of €5,355 per square meter, followed by Barcelona (€4,155/m2), Madrid (€4,037/m2), Palma (€3,909/m2), and Bilbao (€3,191/m2).

On the opposite end of the spectrum, Zamora stands as the most affordable capital, with a price of just €1,116/m2.

Examining regional trends, during the third quarter of the year, prices have surged in 11 autonomous communities.

The Canary Islands lead the pack with a staggering 4 per cent increase in property prices. The Valencian Community follows closely with a 2.2 per cent uptick, along with the Balearic Islands (2 per cent) and Andalusia (2 per cent).

In contrast, Catalonia experienced the most significant decline, with prices falling by 1.2 per cent. Navarra (-1.1 per cent), Extremadura (-0.8 per cent), and Madrid (-0.4 per cent) also witnessed price decreases.

Notably, three autonomous communities reached historic price highs: Andalusia, the Canary Islands, and the Balearic Islands.

Provincial Peaks and Valleys

Zooming in on provinces, 15 of them observed price reductions in the third quarter of the year.

Ourense recorded the most substantial drop at -1.9 per cent, followed by Zamora (-1.7 per cent), Alava (-1.6 per cent), Salamanca (-1.5 per cent), Badajoz (-1.4 per cent), Barcelona (-1.1 per cent), and Navarra (-1.1 per cent).

Conversely, Santa Cruz de Tenerife led the way with an impressive 5.6 per cent increase in property prices, trailed by Malaga (3 per cent), Almería (2.8 per cent), and Guipuzcoa (2.7 per cent).

The ranking of the most expensive provinces is spearheaded by the Balearic Islands, boasting an average price of €4,034/m2, closely followed by Guipuzcoa (€3,486/m2).

Behind them are Madrid (€3,129/m2), Malaga (€3,037/m2), Vizcaya (€2,737/m2), and Barcelona (€2,665/m2).

Ciudad Real emerges as the most budget-friendly province (€752/m2), followed by Cuenca (€797/m2) and Jaén (€824/m2).