Second-Hand Property Prices Record Lowest Annual Drop in 3 Years

According to recent figures published by property portal, fotocasa.es, developed in collaboration with the IESE business school, the average price of second-hand property in Spain stood at 1,699 €/m2 in May, and registered a drop of -0.7% compared to April. Year-on-year, prices registered a decline of -5.3% in May, which represents a slowdown compared with that recorded in May last year when housing prices fell by -11% year-on-year. In fact, the annual variation in May (-5.3%) is the mildest since May 2011, and the slightest decline registered in the past 38 months.

Head of research at fotocasa.es, Beatriz Toribio, said: “The fall in housing prices in Spain is continuing to slow as a result of increased interest from foreign investors and the improving economic situation. But prices will continue to decline and the sector will not recover while domestic demand remains weak. It is therefore essential that the labour market and access to finance improves.”

Their figures show that the average price of resale property in Spain has accumulated a decline of -42.5% since registering its record high in April 2007, with 2,952 €/m2. In fact, 10 regions have already registered declines of over -40% since prices peaked six years ago. The region which registered the greatest drop in prices is La Rioja (-53.6%), followed by Aragón (-48.6%), Navarra (-48%), Catalonia (-47.4%), Castilla-La Mancha (-46.8%), Murcia (-45.8%), Valencia (-44.7%), Madrid (-42.1%), Andalusia and Asturias, both with a decline of -41.1%.

The average price of second-hand housing rose in only two of the 17 autonomous regions in May: Navarra (+0.5%) and Madrid (+0.1%), while 14 regions registered declines compared to the previous month, with the steepest decline being recorded in Extremadura (-2.1%), followed by the Canary Islands (-1.8%), Murcia (-1.2%) and Castilla-La Mancha (-1.1%). In contrast, the smallest decline was registered in Cantabria (-0.1%), followed by Valencia, Castilla y León and Catalonia, all registering declines of -0.7% in May. Prices in the Balearic Islands remained stable compared with the month of April.

With regard to prices, the Basque Country is still the most expensive region in Spain, with an average price of 2,913 €/m2, followed by Madrid (2,299 €/m2) and Catalonia (2,034 €/m2). Conversely, Castilla-La Mancha (1,178 €/m2), Extremadura (1,186 €/m2) and Murcia (1,244 €/m2) are the regions with the most affordable second-hand housing prices.

Month-on-month, three provinces (6% of the 50 analysed) registered increases in housing prices, ranging from 0.6% in Granada to 0.1% for Madrid. In contrast, prices fell in 45 provinces (90%), ranging from -2.6% recorded in Girona to -0.1% in Cantabria. The provinces of Ourense and the Balearic Islands remained stable compared with the month of April.

Of the total of 376 municipalities in Spain analysed in the study, in 80 municipalities (21%) house prices rose in May, and in 7 municipalities (2%) the prices remained stable, while in the other 289 municipalities (77%), decreases in prices were registered.