Resale Property Prices Increased in Q1

Spanish property market recovering
The Spanish property market is recovering

Property portal Fotocasa have released their Q1 report on second-hand (resale) property prices in Spain. The data shows a slight increase in prices of 0.5% over the first quarter of 2016 meaning a square metre will cost an average of 1,627 Euros. According to the report this is the first quarterly increase in prices since 2007.

The data released by Fotocasa suggests this is the third consecutive quarter of growth following Q3 and Q4 of 2015 which recorded increases of 1.1% and 0.7%, respectively.

Beatriz Toribio, from Fotocasa Studies, said: “The price of housing is stabilizing after eight years in the red. In 2015 we saw how the fall abruptly slowed and how some areas closed the year with price increases. After losing 45.5% of its value, we hope that in 2016 housing prices have bottomed out across much of the country and will begin to recover in the major economic and population centres,”

According to the report, the inter-annual rate showed an increase of 0.6%, the first increase in year-on-year prices recorded since 2007.

Q1 by Region

When comparing to December 2015, eight of the country’s autonomous communities recorded a positive change with the Canary Islands registering the highest increase of 6.3%. The Balearic Islands followed with a 2.2% increase. Valencia and Andalucia registered increases of 2.2% and 1.4% respectively, while Madrid showed an increase of 1%, with Catalonia closing the quarter with a 0.9% rise in property prices.

When we look at the average price per square metre, the Basque Country topped the table with 2,736 Euros per m². Second and third positions were taken by Madrid and Catalonia with €2,225 and €2,064 p/m².

The cheapest region was Castilla-La Mancha where the same space will cost you €1,050. The next two cheapest regions were Extremadura (€1,088 p/m²) and Murcia (€1,143 p/m²).

By Province

Thirty of the country’s provinces showed an increase in prices with the largest recorded rise being in Santa Cruz de Tenerife where prices increased 2.9%. Las Palmas was next with a 2.4% increase.

Of the 779 municipalities looked at by the study, 459 recorded prices increase, while 320 showed a decline in property prices.

NB: I must point out that this is data based on the prices of the properties Fotocasa, a property portal, have for sale on their site. Another property portal, Idealista, also release data based on their listings and that is why, in case any of you noticed, a previous article based on Idealista data, suggested prices had actually fallen in Q1. As with everything, it depends who you ask! If I report on both studies you can get a better idea of what the actual figures are.

Property Rental Prices Lowest Since Crisis

The cost of renting a property in Spain has fallen by an average of 239 Euros since the peak of 2007, according to analysis by property portal Fotocasa.

Pre-crisis the average cost of a rental property in Spain with an area of 80m² was 810 Euros, or 10.12 Euros per m². In February 2016 the average price had fallen to 571 Euros, representing a 29.6% fall over the last nine years.

Rental costs lowest since 2007
Rental costs lowest since 2007

Beatriz Toribio, responsible for fotocasa studies, said “Renting a home today is almost 30% cheaper than in 2007, but in the last two years we have seen rental prices have begun to recover due to growing interest and increased demand since the crisis erupted. This explains why owners are increasingly reluctant to lower prices and closed 2015 with the highest increase (3.6%) in the history of fotocasa’s real estate index.”

By Community

The autonomous community that registered the largest fall in rental costs was Aragón where rental prices have fallen an average of 349 Euros over the last eight years. Prices in the community peaked in June 2008 at 10.85 p/m², or 868 Euros per month for a property of 80m². The fall is 40.3% with the same example property now costing only 519 Euros per month.

Conversely, Castilla and Leon has seen the slightest fall in prices over recent years. The average reduction in Castilla and Leon is 81 Euros since its peak in May 2008 when an 80m² property would cost 532 Euros to rent. In february this year the cost stood at 451 Euros.

High / Low

During February this year the most expensive part of Spain to rent a property was the Basque Country where the average rent is 813 Euros. Here, prices have fallen by 13.5% since the peak, an equivalent value of 127 Euros.

The cheapest place to rent a property is Extremadura where the average cost to rent an 80m² property is 358 Euros. This area saw its peak in June 2008 when the average price was 443 Euros. February’s costs represent a reduction of 85 Euros, or 19.2%.

By Province

When looking at the rental prices across the country’s provinces, Huelva recorded the largest fall. Prices in the province have fallen considerably since their peak in May 2007. Back then, a rental property would have an average monthly rental cost of 851 Euros. By February this year this cost had fallen a massive 43.9% to only 478 Euros per month for an 80m² property.

The lowest fall by province was recorded in Palencia. Here, property rental costs, while still cheaper than they used to be, have only fallen by an average of 38 Euros over the last nine years. Renting a property in Palencia in February 2016 would have set you back an average of 438 Euros, 7.9% lower than prices in 2007 when the average stood at 475 Euros.

 

Property Discount is No Guarantee of a Sale

Selling your property became more difficult in 2015, according to data released by online property portal Fotocasa.

Owners who had a property for sale in 2015 found they had to reduce the original asking price by an average of 14% in order to sell. This is the equivalent of 33,400 Euros, one percentage point below the previous year. Fotocasa reported that the 14% decrease was the slightest reduction required to sell over the last six years, and indicates a continuing recovery in the property market.

Discounts Applied to Properties by Year

On average, 36% of owners who put their property on the market were able to close the deal, an increase over 2014 when only 28% of owners managed to sell. On average it took 10.6 months to sell a property, one month shorter than in 2014 when it took an average of 11.5 months.

In 2015, 44% managed to sell their property in under six months, while 25% needed between seven and 12 months to sell. A further 16% took between 13 and 24 months while 15% took over two years to complete a sale.

Beatriz Toribio from Fotocasa, said “The housing market has not yet recovered, but has been reactivated and therefore is more dynamic than in the worst years of the crisis. In 2015 those who managed to sell their property took less time to complete and applied a lower discount. But to sell, you need to lower the price: 81% of the owners who sold a property in 2015 had to do this,”.

Type of Residence

Of the sellers surveyed for the report, 46% said the property they sold was their main residence, followed by those selling a second home (22%), while a further 18% said the property sold had been inherited.

By types of property 52% were flats and 19% were houses. Apartments made up 7%, with 4% being duplex properties, and 4% penthouses.

Price Reductions Don’t Guarantee a Sale

According to the data, 64% of properties for sale in 2015 failed to sell, despite an average time on sale of 14 months. Of those that didn’t sell, 66% said they had applied a discount to the asking price with an average discount of 14% of the asking price. This translates into 32,797 Euros but this was not a guarantee that the property would sell.

Toribio explained that “The price is one of the factors that influence the purchase of a house, but also the location, distribution, quality and housing characteristics. Not everything is sold,”.

Despite the findings the survey also showed that there is still some resistance to reducing prices with 52% of owners who did not manage to sell said they had not applied a discount and were not willing to do so.

“For the first time during a study we found owners who, despite not selling, are reluctant to lower the asking price, which is very surprising after all that has happened in the housing market,” added Toribio.

How to Sell?

The data also shows that more people are turning to Spanish real-estate agents in order to market and ultimately sell their property. 68% of people who sold their property in 2015 did so through an agent.

Sellers citied the main reasons for using agents rather than selling privately as being the quality of potential buyers (43%), convenience (24%), and avoiding red-tape (16%).

You can read the full report here.