October 23, 2020

House prices fall in capitals for the first time in four years


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The average internal price of housing fell for the first time in four years in Spanish capitals. This is confirmed by a report made by the real estate appraisal company, Tinsa, which reflects a 0.6% decrease between the last month of September and the same period in 2019. A negative data that had not appeared since August 2016.

This study, which analyzes the behavior of the real estate market in capital cities, large cities, metropolitan areas, coastal areas and small inland municipalities, also figures 2.2% for the general index decline and point to Balearics Y Canary Islands as the most affected geographical areas have seen their price record. The dizzying decline in tourism and the consequent lack of foreign investment have caused both communities to suffer a 3.8% drop in house prices since September of last year. Following this trend, Mediterranean coast It has also seen its value decrease by 3.3%, although together with the metropolitan areas they were the only groups that maintained their monthly appraisals in September. For their part, the rest of the municipalities also experienced a 3.8% decrease in this score.

«The September data confirm the descending line of values ​​during the last months, evidencing the beginning of a Change of trend as a result of the current situation of uncertainty and weakening of demand “, he explains Rafael Gil, Director of the Tinsa Studies Service. In this sense, Gil affirms that the adjustment is “more intense” if the data is compared with the month of March, than in a year-on-year perspective. Considering these parameters, the decline in the general index would collapse to 3.1%, while prices in capitals and large cities would fall to 2%. In this period of time, the Balearic Islands and the Canary Islands would once again be the most damaged, doubling their decrease to 7.6% respectively.

Long recovery

In line with data from Tinsa, the Ministry of Transport, Mobility and Urban Agenda, announced this summer that the house purchase accumulated a year-on-year fall of 25.1% until July and mortgage firms 22 percent. A complicated scenario. And it is that the insecurity that the Covid-19 continues to leave and the restrictions carried out by the Sánchez Government, prevents us from seeing a turn of the page in the short term. In the case of large cities, and especially if we talk about Madrid, Barcelona and Zaragoza, which have traditionally marked the change in trend, the great incidence that the virus has had in recent months in them makes recovery even more complicated. According to Gil, the improvement “will depend on the different factors that affect the residential markets of these cities: residential rental, investment and the purchase and sale market itself.” But he estimates that the most likely trend in the coming months is “downward.”

The same forecast is given by the economist for coastal areas, where there was already a andprice stabilization in the months prior to the pandemic, “as a result of a cooling in demand in line with the macroeconomic situation, a considerable increase in supply in some coastal locations and a significant appreciation cycle.” For what Gil thinks that in this geographic group “a new cycle” will open, although he points out that “logically” his data will improve as soon as the health situation allows the return of the purchase and foreign investment.

Despite this paradigm shift, the price of housing in Spain continues to enjoy good health and still remains a 14.2% above the minimum recorded in February 2015.

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