The future is looking bright for the Spanish property market with national average values set to increase 6% in 2018 whilst Madrid, Valencia, Málaga and the Balearic Islands could witness growth as much as 10%.
According to research data compiled by leading real estate consultancy firm CBRE, the outlook for the Spanish property market in coming years is positive with an expected 6% in home prices this year followed by less intensive growth of between 3% to 5% during 2019.
Homes in major cities such as Madrid and Valencia along with the tourist driven areas of Málaga and the Balearic Islands are expected to witness more acute growth with year-on-year price increases expected to reach 10% in 2018. Growth in these areas is predicted to continue, albeit at a slightly more moderate rate of 6% annually in 2019 onwards.
The report cites the current imbalance between supply and demand as a key contributor to the rise in prices. With rental prices soaring and continued low mortgage interest rates, the number of buyers in the marketplace is outstripping the supply of available housing, particularly new build, the exact opposite of the situation ten years ago which saw the collapse of the property market.
The report points out that the resurgence in Spanish property prices is a healthy one and not cause for concern, “In recent years, price rises of between 5% and 6% have been recorded, but during the boom, those figures reached 12% nationally” explained Samuel Población, National Director of Residential and Land at CBRE España.
The consultancy firm is also predicting continued growth in demand with an expected 575,000 home sales transactions in 2018, representing 8% year-on-year growth compared to 2017. Foreign buyers are expected to maintain an important role within the Spanish property market with demand centred around the well established tourist provinces of Alicante, Málaga, Barcelona, the Balearic Islands and Tenerife.
Growth in the rental market, which currently stands at 22.5% of all Spanish households, is also expected to drive demand from buy-to-let investors. “The expansion of the rental market is attracting lots of investors, something that wasn’t happening ten years ago, given that they can now achieve returns of between 4% and 6% on average”, quoted Álvaro Martín, Head of Research at CBRE.