Half of real-estate market In large cities it is overrated. It is the main conclusion of First Health Observatory of the Real Estate Market
published yesterday by the appraiser and consultant Gloval.
Barcelona is among the big capitals where the price at which the properties are offered is more overrated with 84% of the census tracts (something like the neighborhoods that define the appraisers to compare prices) in that situation. In addition, 48% of real estate would be at "bubble risk". That is, they would be in the maximum price increase limit, according to Gloval, the second appraiser in volume of operations in Spain. Market health is only more complicated in Malaga than in Barcelona. There the overvaluation affects 99% of the market. In total, more than half of the real estate market of buying and selling real estate of the five most populous Spanish cities is above its price and at risk of bubble.
In Seville, bubble risk barely reaches 9%, compared to 29% of the overvalued market
Together with Malaga and Barcelona, Bilbao, with 74% of properties offered at a premium, Madrid, with 72%, and Valencia, with 69%, would complete the top five.
To reach this conclusion, the study has taken into account both direct variables, such as the increase in prices offered for homes for sale or rent, as indicators derived from income levels, ease of access to housing, the level of Unemployment or housing demand.
From Gloval, bubble markets are classified as those where "prices are in an unstable equilibrium and are very sensitive to the economic circumstances of the moment, so a worsening of these can cause a sharp fall in prices in these markets."
Therefore, there is no direct relationship between market overvaluation and the part that is at risk of bubble. For example, while Madrid is awarded an overvaluation of 72% of the market, only 21% would be at risk of bubble. The situation is more extreme in Las Palmas de Gran Canaria, where while 38% of the real estate market is considered overvalued, in no case is bubble risk detected.
In Seville, the bubble risk barely reaches 9%, compared to 29% of the overvalued market. These are some examples that mean that while in large cities the overvaluation reaches 50% on average, if the approach is extended and small and medium-sized cities are included, that risk decreases to 22%. A market diversity that, according to Carlos Gómez, chief data & analytics officer From Gloval Analytics, it is very necessary for politicians to keep in mind if they want to address effective housing policies for all territories.