Spain: 2023 Housing Market Report

VRG’s Spain-based member, Gesvalt, has issued its Housing Report for Q2 2023. The study, carried out with proprietary data by the company’s Research Department, reflects a 6.4% YoY rise in house prices.

This increase represents the second year-on-year rise of more than 6% in 2023 and the second highest rise since the pandemic, after the 6.7% increase in the first quarter of the year. With this new record, Spain has now made a string of nine consecutive quarters growing above 3%. Compared to the previous quarter, the rise was 2.1%, reflecting the expected price stabilization following the upturn due to accelerated purchase decisions caused by the increase in interest rates observed during the previous months. In this sense, Gesvalt expects house prices to stabilize over the coming months, even with price falls in some areas.

In this way, the average house price per sqm has reached €1,568, although it is still 26.8% below the all-time high recorded in Q1 2008. This means that a house with an average value and 90 sqm floor area which last year was worth €132,660 would now cost €141,120.

Unlike the previous quarter, the increase in house prices has not been unanimous in all Spanish territories. Castile-La Mancha has seen a slight decline of 0.2%, being the second region with the lowest house prices per sqm (€887), only ahead of Extremadura (€861). On the one hand, Castile and León was the autonomous community with the lowest growth, with only 0.1% and the average house price per sqm standing at €1,017. On the other hand, the Balearic Islands, with €2,676, remains the autonomous community with the highest house prices per sqm for the seventh quarter in a row, once again followed by the Madrid region (€2,481), and the Basque Country (€2,397), being the only regions exceeding €2,000.

Six Communities With Growth of Over 7%

An uneven growth in house prices at the regional level has continued in the second quarter of the year. Despite this, six autonomous communities have seen rises of over 7%, led by the Valencian Community, which has reached €1,257 per sqm after an 8.2% rise, followed by Andalusia (7.8%), Murcia (7.6%), the Balearic Islands (7.2%), the Canary Islands (7.2%) and Navarre (7%).

At the provincial level, the highest YoY rises were seen in Malaga (+12.4%), Alicante (+11.3%) and Las Palmas (+8.4%). On the other hand, provinces with the most negative variations included Zamora (-4.8%), Cuenca (-4.3%), Albacete (-2.46%) and León (-1.4%).

Widespread Growth in Rental Prices

Regarding rents, the growing trend remains steady with increases in most provinces, with Cáceres, Castellón and Teruel being the only provinces with YoY declines. Increases of more than 15% were seen in the Balearic Islands (+22.4%), Málaga (+21.1%), Santa Cruz de Tenerife (+20.2%), Girona (+20%) and Cantabria (+16.1%).

When analyzing the absolute figures, the province of Barcelona once again ranks first with an average monthly rent per sqm of €18.91, followed by the Balearic Islands (€17.27) and Madrid (€16.59). On the other hand, most provinces in the lower part of the ranking have seen average monthly rents above €5.50/month and only six provinces have seen average monthly rents below €5.50 per sqm, these being Teruel (€5.06), Jaén (€5.11), Cáceres (€5.13), Zamora (€5.20), Cuenca (€5.32) and Ciudad Real (€5.44).

Housing Expenditure-to-Income Ratio Exceeds the 35% Threshold

According to the latest available data (2022 year-end), the theoretical effort required for households to buy a home -measured by the housing expenditure-to-income ratio has increased by almost three points compared to the previous quarter, standing at 36.10%, already exceeding the 35% threshold, the percentage recommended to maintain healthy personal finances.

This loss of purchasing power for Spaniards has also meant that the number of years of salary that a middle-income family would need to spend to be able to buy an average home has once again increased, reaching almost eight years.