MADRID – Recent developments in the real estate market of Spain’s two largest cities, Barcelona and Madrid, indicate an impending decline in real estate prices. This marks a significant change after years of steady price increases.
Singular Bank experts, including strategy chief Roberto Scholtes, predict in the newspaper La Vanguardia a price drop of around 7% for homes. Furthermore, they predict a drop of even 20% for office spaces in Barcelona and Madrid. These predictions are based on current market conditions, where supply and demand do not seem to find each other.
National outlook
Nationally, Bankinter predicts that house prices will rise by 1.2% this year, followed by a decline of 2% next year. These subtle fluctuations contrast with the situation in other European countries. There, economic contraction and interest rate increases have a direct impact on the real estate market.
Regional developments
According to the latest report from the Colegio de Registradores, the average price per square metre in Barcelona has fallen by 0.8% compared to last year, while in Madrid prices are still rising. These data indicate a clear slowdown in the market in both cities.
The shift in demand
The demand for housing is also shifting to the peripheral areas of both cities. This is underlined by the decrease in the number of housing transactions in city centres compared to the provinces. This trend points to a search for more affordable options outside city centres.
Biggest impact on commercial real estate
The office market in Barcelona and Madrid is seeing a significant decline in transactions, with a decline of 72% in Barcelona and 34% in Madrid. This indicates a strong tendency among buyers to wait for price adjustments, which are expected to occur in the first half of next year.
Although the real estate market in the centres of Barcelona and Madrid is still characterised by limited supply, current trends point to an upcoming change. However, with the expected price drops, new opportunities may arise for both buyers and investors.
Also read: Spain is building more new homes amid a declining number of real estate transactions
