House price growth slows to 3.5% year-on-year

At Gesvalt, we have published our latest Housing Report for the third quarter of 2023. The study has been carried out by the company’s Research Department using our own data and reflects a 3.5% increase in house prices compared to the same period in 2022.

This is the tenth consecutive quarter in which the increase has been greater than 3%. However, it also represents a slowdown compared to the first quarter of 2023, when the increase was 6.4% year-on-year. Compared to the previous quarter, there has been a 1.1% decrease in house prices, something that has not occurred since the first quarter of 2022. This reflects the slowdown in the purchase market and a stabilisation of prices after the upturn, due to the advance in purchase decisions caused by the increase in rates repeated over the last few months. At Gesvalt we point out that this growth figure should stabilise even more during the first months of 2024, and is already being seen in some areas.

As a result, house prices have stood at €1,551/m², which means that it is 27.6% below the all-time high recorded in the first quarter of 2008. This figure also means that a property with an average value and a surface area of 90m², which would have been worth €134,820 last year, would now cost €139,590 to purchase.

After a slight decline in Castile-La Mancha in the previous quarter, in the third quarter of 2023, the general trend of house-price increase in all national territories has recovered, although at a slower pace. For the eighth consecutive quarter, the Balearic Islands at €2,717/m², is once again the Autonomous Community with the highest house prices in Spain. The Balearic Islands are ahead of the Autonomous Community of Madrid, at €2,497/m², and the Basque Country, at €2,343/m², being the only three regions that exceed €2,000/m². On the other side of the coin, the only autonomous communities that do not reach an average price per square metre of more than €1,000 are Castilla La Mancha, at €883/m², and Extremadura, at €847/m².

The Canary and Balearic Islands – second consecutive quarter above 7%

In the third quarter of the year, house prices continued to grow across the board, though unevenly between the different Autonomous Communities. Five regions stood out with growth of over 4%, such as the Canary Islands, which reached €1,609/m² after an increase of 7.8%, and the Balearic Islands, with an increase of 7.3%. These were followed by Murcia (5.9%), Navarre (5.5%) and the Valencian Community (5.2%).

At provincial level, the year-on-year increases in Santa Cruz de Tenerife (+7.9%), Las Palmas de Gran Canaria (+7.8%), Alicante (+6.5%) and Lugo (+6.2%) stand out. On the other hand, the provinces with the most negative variations were Cuenca (-3.0%), Ciudad Real (-2.1%) and Zamora (-1.7%). The provinces with the highest prices continue to be Guipúzcoa, the Balearic Islands, Madrid, Vizcaya and Málaga, maintaining values above €2,000/m². On the other hand, with a unit value below €1,000/m² we find seventeen provinces, one more than in the previous quarter.

Rent increases by over 18% on the islands

The rental market has reflected a similar trend to that of the sale and purchase market, but with even sharper growth. There were only three provinces with decreases in rent, these being Lérida (-3.2%), Teruel (-2.5%) and Valladolid (-1.6%). On the other hand, there are three provinces where growth has been higher than 15%, such as Alicante (+15.5%), and especially the Balearic Islands (+18.8%) and Santa Cruz de Tenerife (+18.3%), with increases of more than 18%, driven by the seasonal demand of the summer months.

Analysing the absolute figures, Barcelona continues to lead the provincial ranking in terms of the highest rents with an average of €19.64/m²/month, with the Balearic Islands in second position (€17.82/m²/month) and Madrid in third (€16.82/m²/month). At the bottom of the ranking are the only four provinces with rental units below €5.50/m²/month, these being Jaén (€5.01/m²/month), Teruel (€5.34/m²/month), Cáceres (€5.38/m²/month) and Zamora (€5.47/m²/month).

The theoretical effort to buy a house is still far from the 35% threshold.

According to the latest available data, during this period, the theoretical effort required by households to buy a house has increased again. It has risen by two points compared to the previous quarter, standing at 38.3% and moving even further away from the healthy threshold of 35%.

The average term of new mortgages granted has also increased to 24.7 years. Despite this, both the doubtfulness rate of mortgage credit and the ratio between the loans requested and the value of the properties to be financed have decreased.