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PROPERTY

Why are property prices in Spain still rising if sales are dropping?

House prices in Spain increased by 4 percent in 2023 despite an overall fall in sales, according to new property data from the House Prices Index published by Spain's National Statistics Institute (INE).

Published: 11 March 2024 10:34 CET
Why are property prices in Spain still rising if sales are dropping?
house prices showed positive annual rate variations in all regions of Spain. Photo: Luis Quintero/Unsplash

Though this suggests a slight cooling in the Spanish property market, particularly compared to 2022, when prices rose by 7.4 percent, prices for both new build (7.5 percent) and second hand properties (3.6 percent) still increased year-on-year in 2023.

The 2022 increase was the highest annual price variation in over a decade.

READ ALSO: What will happen to property prices in Spain in 2024?

Experts say the gap between new and second-hand property price rises is evidence of internal tensions within the new build construction market, where supply is scarce.

“The obstacles surrounding this type of construction have a long way to go, not only because of inflation, which affects the cost of materials, production and logistics, but also because of the low production levels of new construction,” María Matos, director of research at Fotocasa, told Spanish outlet 20Minutos.

Though prices do seem to have moderated somewhat, the comparatively softer price rises in 2023 still occurred despite an overall fall in sales of 9.7 percent compared to 2022, and a significant 17.8 percent fall in new mortgages, INE data shows.

READ ALSO: How to change from a variable to a fixed mortgage in Spain

Interestingly, despite the overall fall in sales in percentage terms, 2023 was one of Spain’s best years for property sales since 2007, with 586,913 sales and the third best mortgage year since 2011 with 381,560 transactions signed.

Even though the Spanish economy has fared better than many of its European neighbours in getting a grip on inflation, the price rises come in spite of interest rates hikes in recent years and the lingering effects of inflation weakening spending power.

“The demand to buy housing continues to be very intense, despite the ten interest rate hikes and the consequent tightening of mortgages,” says Matos.

“With a strong intention to buy on the ground against the shortage of existing stock, which is becoming increasingly significant, there is an imbalance that pushes the price up.”

Around the country, house prices showed positive annual rate variations in all regions of Spain. INE data shows that the highest fourth-quarter price increases were in Andalusia (5.3 percent), Navarra (4.7 percent), the Canary Islands and Madrid (both 4.5 percent).

The lowest increases were in Castilla-La Mancha (2.1 percent), Extremadura (2.2 percent) and Galicia (3.4 percent).

With the 2023 rises, house prices have been rising uninterruptedly in Spain since the second-quarter of 2014, when the increases resumed after six entire years of decline following the bursting of the housing bubble in 2008.

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PROPERTY

Too hot or too cold: Spain’s homes struggle to keep comfortable temperatures

Amid rising temperatures and more extreme weather, new data reveals that a significant proportion of Spaniards are struggling to keep their homes at comfortable temperatures during the winter and summer months.

Published: 14 May 2024 09:51 CEST
Too hot or too cold: Spain's homes struggle to keep comfortable temperatures

Spaniards are increasingly finding it difficult to keep their houses at comfortable temperatures during the summers and winters, and the problem has grown markedly over the last decade.

This follows new data released from Living Conditions Survey recently published by Spain’s National Statistics Institute (INE), which revealed that over a quarter of families in Spain struggle to heat their homes sufficiently in winter and that a third are too hot in summer.

The percentage of households reporting difficulties in keeping their homes at a comfortable temperature has increased by almost ten percent overall in the last decade.

READ ALSO: Why are Spanish homes so cold?

In the colder months, the proportion that say they can’t keep their property sufficiently warm during winter has grown from 17.9 percent in 2012 to 27.5 percent in 2023.

The summer heat poses an even greater problem for Spaniards. The percentage of households struggling to keep their homes cool enough during the summer months has risen from a quarter (24.8 percent) to over a third (33.6).

READ ALSO: Ten ways to protect your Spanish property against the summer heat

This comes as Spain faces record breaking temperatures year round and rising energy costs. According to Spain’s State Meteorological Agency (Aemet), 2023 was the third hottest summer since records began, surpassed only by 2022 and 2003.

In summer 2023 alone, four official heat waves were recorded, lasting a total of 24 days.

READ ALSO: How the right orientation of your Spanish home can save you hundreds on energy bills

However, though rising temperatures clearly play a role, so too does geography, income, and poor energy efficiency caused by poor insulation.

Murcia is the region where the highest proportion of households have problems keeping their homes cool in the summer, with almost half of families polled saying they are in this situation (46.6 percent). Murcia was followed by Madrid, Andalusia, Catalonia, Aragón and Extremadura, where the figure is 36 percent.

At the other extreme, in the cooler, northern regions of Asturias, Cantabria and Galicia, it is not even 20 percent.

Despite that, it is also the southern regions that struggle the most with keeping their houses warm enough during the winter. Murcia is once again the region where the highest percentage of families are unable to keep their homes at an adequate temperature over the colder months.

40.1 percent of Murcianos say they find it difficult to heat their homes over winter. In Andalusia and Extremadura the figure is almost 35 percent, the other two regions that top the list, meaning the three most southern regions of Spain came out on top.

In contrast, in Navarre, Castilla y León​​, and the Basque Country, less than a fifth (20 percent) of households report problems maintaining a sufficiently warm temperature at home during winter.

Household income also factors into this problem. INE data shows that the proportion of households struggling to maintain an adequate temperature in their homes increases as average income decreases. Among families with the lowest income levels, 38.9 percent say that they are cold in winter and 41.3 percent say that they are too hot in summer.

Of the regions that struggle to keep their homes warm or cool enough, Murcia, Andalusia and Extremadura all have some of the lowest median per capita incomes in the whole country, along with some of the highest levels of poverty.

Equally, the parts of the country where this seems to be less of a problem, such as the Basque Country, Galicia, and Navarre, are some of the wealthiest regions of Spain.

Housing quality and insulation also contribute to poor energy efficiency, which in turn makes temperature control more difficult. Even among households with high incomes, 15 percent say that they are unable to heat their property sufficiently in winter and 24.8 percent struggle to keep it cool enough in summer.

According to INE data, a quarter (25.1 percent) of Spanish households have not made any improvements to their thermal insulation or heating system in the last year, significantly more than the 14.1 percent who have been able to make changes.

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