Almost halfway between Madrid and Barcelona is Zaragoza, the fifth Spanish city in size. Its population, as in the first two cities, has hardly changed in the last ten years and can boast a lower unemployment rate. It would be reasonable that, roughly speaking, the real estate market in Zaragoza behaves in a similar way to that of two cores that it has, by road and AVE, to some 300 kilometers. But the evolution of prices since the crisis could not be more different (see the chart). In fact, to find some parallelism with what happened in Madrid and Barcelona, it is easier to look at Washington or New York, cities that in the last five years experienced a price increase similar to that of the Spanish capital, according to data from the real estate consultancy Knight Frank.
The separation of the two main cities from the rest of the Spanish property market is visible in numerous statistics. Without going any further, last Friday, the INE published the Housing Price Index for the third quarter of the year. In Spain year-on-year growth stood at 7.2%, but the data deceives: the majority of communities fell far below.
Actually, only Madrid and Catalonia exceeded the national average. And although this statistic does not descend to the local level, it is not risky to suppose that within both communities it is the capitals and their metropolitan areas that most pull the car. This can be observed, for example, in the series on appraised value of housing that the INE also publishes. But why does this happen?
For real estate prices in London, see quotes in Tokyo. With this title, Claudio Raddatz, head of the International Financial Stability Analysis Division of the International Monetary Fund (IMF), wrote. an article on the agency's blog. The text presented the Report on global financial stability last April. In a chapter of that study, of semestral periodicity, the "global" synchrony of housing prices between countries was analyzed, with special attention to the large metropolitan areas of the entire planet.
"The exposure of countries and cities to global financial conditions has played an important role. This is especially clear for large cities in advanced countries, which probably reflects their greater financial integration or their attractiveness to investors, "explains Raddatz by e-mail. It refers, among others, to the monetary policies of the big central banks to stimulate credit. However, clarifies the Chilean economist, the report "did not study the dispersion of housing within countries."
The IMF study did not consider Barcelona in its analysis either, but for the Spanish real estate sector it was accepted as a theoretical explanation of something that the data has shown for some time: as the crisis was overcome, real estate in Madrid and Barcelona began to grow before and with more force than in the rest of the country. "Recovery is not the same", sums up Beatriz Toribio, director of studies at the real estate agency Fotocasa.
When asking about the causes, the experts agree. In addition to the factors cited by the IMF in its report -such as the ease of access to credit, the expansive economic cycle or the attraction of international investment- Toribio points out that the two cities "are the main economic drivers of the country and the major demographic poles and tourist. "
In these circumstances, Rafael Gil, director of studies of the appraiser Tinsa, adds two others: the shortage of new housing and the high cost of land. But for Gil, beyond the similarities with other large cities, there are also "own factors" that can be decisive if world uniformity breaks down. Therefore, he adds, Madrid and Barcelona "in recent months have had different behaviors to other cities in the world where it begins to see a contraction of the expansive cycle." That is to say, prices have continued to rise while they already fall in other large cities.
Neither the predictions of the Fotocasa expert point to immediate downturns in the first two Spanish cities. But that difference compared to other urban areas would not be, after all, bad news. At the end of the day, Raddatz recalls, "the degree of price synchronization affects the effectiveness of local policies that try to control price escalation.