The Spanish real estate market continues to show signs of recovery and dynamism, especially in tourist areas. According to the latest Tinsa IMIE General and Large Markets index report, the price of new and used housing rose 0.5% in June compared to the previous month, bringing the year-on-year rate to 3.2%.
Growth in tourist areas
The tourist areas, particularly around the Mediterranean Coast and the Balearic and Canary Islands, stand out for their considerable price increases. These regions recorded monthly growth of 0.9% and 0.7% respectively, with a year-on-year rate of change of 7.0% for the Mediterranean Coast and 8.1% for the Islands. For the first time, the "Islands" group exceeded the peak level reached in January 2008, reflecting robust demand in these high tourist areas.
In contrast, inland towns and villages, especially the smaller ones, have maintained stable prices with minimal variations, being at the lower end of the growth band, with a monthly increase of between 0.1% and 0.9%. The "Capitals and Large Cities" and "Metropolitan Areas" also showed moderate increases of 0.6% and 0.4% respectively.
Economic and financial factors
Cristina Arias, Director of Tinsa's Research Department, stresses that, despite conservative monetary policies and high benchmark interest rates, the market has received a boost thanks to the first-rate reduction by the European Central Bank (ECB). This lowering of benchmark rates has helped ease access to credit, contributing to the sustained level of property sales.
The demand for housing continues to be characterised by a solvent profile, strengthened by the positive evolution of employment both in Spain and in Europe. Consumer confidence has improved, encouraging investment in first and second homes. However, supply remains limited, keeping pressure on prices in areas with the highest concentration of demand.
Comparison to the 2007 peak
Despite the current growth, the average house value in Spain is still 17.4% lower than the peak reached at the end of 2007, during the real estate boom. Currently, prices are at levels similar to those of December 2010. In capitals and large cities, prices are 14% below their historical peak, while in other areas the difference ranges between 20% and 30%.
The Tinsa IMIE index, which is updated monthly and follows Eurostat guidelines for the compilation of housing price indices, shows a trend of moderate but sustained growth in most regions. Market developments will largely depend on economic and monetary policies, as well as credit availability and consumer confidence.
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