House Prices Rise by 4% in the Third Quarter, the Highest Increase since the Pandemic

At Gesvalt, we have published our Q3 2022 Housing Report. The study, carried out with own data collected by the Research Department, reflects a 4.0% year-on-year increase in housing prices.

This increase, the largest since the reversal of the trend of post-pandemic falls that took place in Q2 2021, accounts for the sixth consecutive rise above 3% at the national level. In the previous quarters, this increase reached 3.5%, 3.7% (two consecutive quarters), 3.9% and 3.3%. According to Gesvalt experts, this situation may arise, on the one hand, as a response to the price contractions in 2020 and, on the other, due to increasing construction costs and demand in view of the now fulfilled ECB’s expectations on interest rate hikes. Nevertheless, with the caution required by the current instability scenario, the ECB also expects a price stabilisation in Q4 2022 and the early months of 2023, due to higher mortgage rates and the prospect of a potential recession.

After this new increase, the average house price has reached €1,498 per sq. m, which means that, despite the upward trend observed, it is still 30.1% below the historical peak recorded in Q4 2008. Therefore, a home with an average value and 90 sq. m floor area would be priced at €134,820, compared to €129,690 last year.

Furthermore, the Housing Market Report also points out that the upward trend in prices has been general, since it has occurred in all the autonomous communities except for Galicia (-0.4%) and Aragon (-0.1%), which again see slight quarter-on-quarter declines, now accompanied by La Rioja, with a slight 0.2% drop. In contrast, the Balearic Islands rank first again–for the fourth quarter in a row– among the autonomous communities with the highest increase in house prices. On this occasion, prices rose by 6.1%, after the 6.7% increase in the previous quarter. The Valencian Community follows in the second position with 5.4%, ahead of the Community of Madrid (4.6%) and Navarre (4%). As for Catalonia, the average price has grown by 2.3%.

Galicia, the departure from the overall trend

The third quarter of the year shows again in Galicia an opposite trend to the national picture. For the sixth consecutive quarter, this region sees a decline in house prices while the national trend is on the rise, although it has been more moderate this time (0.4%). Aragon also repeats for the second consecutive quarter, with a slight 0.1% drop, while prices in La Rioja fall by 0.2%.

On the other hand, the Balearic Islands remained the region with the highest housing prices in the country, with an average value of €2,532 per sq. m, whereas the Community of Madrid remains in second position with €2,406 per sq. m, followed closely, once again, by the Basque Country (€2,276 per sq. m). The lower part of the ranking also remains stable, with Extremadura in the last position ( €840 per sq. m), preceded by Castile La Mancha (€881 per sq. m). Additionally, the Region of Murcia (€1,023 per sq. m) is ahead of Castile and León (€1,012 per sq. m).

Rental prices, also on the rise

After an irregular start to the year, the trend in rental prices stabilised upwards, following in the wake of sales and purchases. In this sense, in Q3 2022, the overall rent rise meant that the only provinces to see an average monthly rent of less than €5 per sq. are Jaén (4.79 €/m²/month) and Zamora (4.96 €/m²/month). On the other hand, the largest year-on-year rent rises are seen in Málaga (+17.6%), Huelva (+14.5%), the Balearics (+13.6%), Castellón (+12.5%) and Barcelona (+12.1%). In contrast, the only three provinces where average rents have dropped are Lérida, Huesca and Zamora.

As for the total price, the province of Barcelona (€17.72 € per sq. m) leads again the ranking in terms of the highest monthly prices, and is once again the only province to exceed the €16 per sq, m barrier. Madrid occupies the second position (€15.75 per sq. m), followed by Guipúzcoa (€15.37 per sq. m) and the Balearic Islands (€15.00 per sq. m). The latter two cases exceed the €15 per sq. m level for the first time.

At the municipal level, the rent trend was similar to that of the province-level trend. The only municipalities with monthly rents in excess of €15 per sq. m continue to be Barcelona, Madrid, San Sebastián and Castelldefels, with €15.11 per sq. m. In these locations, rental prices for an average 90 sq. m dwelling are around €1,600.  In contrast, the municipalities with more than 50,000 inhabitants with the lowest rents are Linares, Puertollano and Ponferrada, with monthly prices of less than €5 per sq. m.

Construction management approvals increase, whereas completion certificates decrease

During the first six months of the year, we observed a differential behaviour in two of the key indicators that mark the performance of the real estate market. At the end of Q2 2022, the aggregated number of construction management approvals shows a 3.2% year-on-year increase.

On the contrary, the number of completion certificates have fallen by 6.0%, although this may be due to their temporary nature last year, given the atypical health situation that was still latent. The autonomous communities with the highest number of certifications are Madrid (18.2% of the total), Andalusia (15.8%) and Catalonia (also 15.6%). In terms of the volume of construction management approvals, the Community of Madrid is in the lead (19.4% of the total), followed by Andalusia (17.5%) and Catalonia (15.3%).