He increase of the housing prices in Madrid and Barcelona has arrived to stay: both cities concentrate the population growth Spanish from the exit of the crisis, in 2014, and given the scarce construction of new homes, the prices of those that already exist, both for purchase like rental, they shoot higher. Thus, since then, in just five years, rents have risen 64% in the province of Barcelona and 54% in Madrid, according to Idealista data, while sales prices have risen 35% in Barcelona and 32% in Madrid.
According to the Valuation Observatory of the association of Spanish appraisers (AEV), the two large capitals “are not in a position to assimilate current and expected levels of demand in the medium term, unless it is derived to peripheral areas, which would produce in them a contagion of price rises that, in some cases, is already taking place ”.
Paloma Taltavull, Professor of Applied Economics Analysis at the University of Alicante and author of the report, notes that “there has been a structural change in the Spanish population: an increase in mobility. Last year the new residents registered in Spain reached 2.7 million people, a level very similar to that reached in 2007, before the crisis, but the difference is that now these new discharges are concentrated in the provinces from Madrid and Barcelona, when before the crisis they were more territorially distributed, ”he explains.
FIVE YEARS OF VÉRTIGO
Rents have risen in Barcelona by 64% and 54% in Madrid since 2014
The report of the Spanish Association of Value Analysis indicates that last year there were 2 million people who, being already residents in Spain, registered in another locality, while 761,000 people registered from abroad. According to Taltavull, mobility is ten times higher than in the 1990s due to the greater presence of foreigners, who move more, and because young people are more likely to move than a few decades ago. “Even with the crisis, mobility did not fall. And the movements are marked by the evolution of employment, which is now created in a few provinces. ”
Josep Oliver, professor emeritus of Applied Economics at the UAB explains that “we are witnessing a new immigration shock following the fall of the population that occurred during the crisis and the creation of new families is growing again, which is already around 110,000 annually ”. In 2017, 60,000 families were created per year, but before the crisis they reached 130,000 annually.
Oliver highlights the outsourcing of the economy: the sector employs 76% of the population compared to 65% in 2007. “It is a process that reinforces the big cities that have the capacity to create a critical mass of activity that reinforces companies and it makes it easier for them to attract talent, ”he says.
Last year, more than half of Spain's employment has been created in both capitals
Javier Blasco, director of the Adecco Group Institute, explained that in the last twelve months Madrid created a third of the new jobs created in Spain (104,500 new jobs) and Catalonia 19.8% (68,500, virtually all of them in Barcelona). “In these provinces the demand for qualified technical employment (engineering) and legal-social areas (graduates in law, ADE, etc.) is concentrated, while employment in education and health is more geographically distributed throughout Spain. The jobs that require a medium level training, of a professional nature, are distributed more between the Basque Country and Catalonia, because they are closely linked to the industry. “And in other sectors, such as commerce, activity is also being concentrated: we see it, for example, in the employment demands of commerce for black friday and Christmas, which is concentrated in the capital because people prefer to go shopping in the big capitals. ”
Oliver points out that the attractiveness of cities for international investors and for tourism is added to demographic factors. "Two changes that are structural have a great impact on demand and therefore on the price of housing," he recalls. Thus, Mervyn King, former governor of the Bank of England, already noted that since the 2000s, large international investors bought housing as a second residence and investment in large cities around the world. And tourism, Oliver explains, "adds pressure, because before tourists looked for sun and beach and now look for cities and the use of the Internet allows them to offer housing as accommodation, and changes the production function of the sector."
Paloma Taltavull points out that during the previous economic expansion employment growth was more territorially distributed, and the population therefore grew in medium-sized cities such as Alicante, Valencia and Murcia, dragging up real estate prices in those areas. "The growth in construction that generated 14% of total employment distributed wealth a lot," says Oliver, while now it is only 5% of total employment (compared to 6% of the European average). "Since the mid-1990s, cities that are state capitals grow more than the rest of the territory – Oliver says – and that pressure on the real estate market is not going to stop," he adds.