House prices in Spain have undergone a rapid development in the past ten years. With an unprecedented price increase compared to 2014, interest in buying smaller apartments has now grown significantly.
The price increase is greatest in the popular regions of Málaga and the Balearic Islands. But also in Valencia, Madrid and Barcelona people now have to pay considerably more for a house than ten years ago, with an increase of 50%. This is evident from a statistical study into home values, the results of which have been published by the Ministry of Transport, Mobility and Urban Planning.
The increase started in 2014 and has led to a small doubling of house prices in Palma de Mallorca. An average of €1,466 had to be paid per square metre in 2014, in the second quarter of this year the average price per square metre was €2,626.
Balearic Islands and Málaga popular in the luxury segment
A similar development in the real estate market has occurred in the province of Málaga. Here the average house price has increased by 75% compared to 2014. While at the time an average amount of €1,264 had to be paid per square metre, this increased to €2,213 in the second quarter of this year. Both Málaga and Palma de Mallorca have become popular destinations within the luxury tourism segment in recent years, significantly increasing interest in property from both private buyers and investors looking to maximise profits.
Despite increased real estate prices, the luxury real estate segment in Málaga, the Balearic Islands, Madrid and Barcelona is growing steadily. According to data from real estate platform Idealista, 70% of all available homes worth more than €1 million are concentrated in these four regions. This percentage even increases if we look at all homes from €3 million.
House prices in cities in particular is more expensive
After the recovery from the economic crisis of 2008, house prices have risen sharply after 2014, not only in Valencia, Madrid and Barcelona, but also in other Spanish cities. In Madrid, the average price per square metre has gone from €2,372 to €3,727, an amount that households having to survive on a minimum wage of €1,080 per month simply can no longer afford. In Barcelona, the difference in the average price per square metre has increased by €1,200 in just ten years and in Valencia by €713.
Salaries have not increased proportionately
If we look at the Spanish housing market in general, it can be concluded that house prices have risen by an average of 25% over the past ten years. Against this development, the average salary, according to statistics agency INE, increased by only 10% in the same period. Because this has major consequences especially in the regions where house prices have risen the fastest, the Balearic Islands district council is preparing a bill to keep the housing market accessible also for lower incomes with a supply of lower-priced homes.
Now that the housing market is almost inaccessible to families with lower and middle incomes, interest in smaller apartments and houses has increased. In 2021, the average living area of houses sold was 119 square metres, in the second quarter of this year the average size was only 110 square metres.