Residential property prices rise 1% in Spain last year as home values predicted to level off

Catalunya houses and flats went up by 5.3%, showing the highest increase in the country, with those in Madrid rising by 3.3% and in the Balearic Islands by 2.7% - all of these above average.

Although in general the housing market freefall seems to be coming to an end, sharp disparities are seen across the 17 regions.

Bargains can still be found in Murcia, which saw a fall of 4.3% - meaning now is a good time to buy, since returns on the investment will start to be seen once it catches up with the rest of the country – and in Navarra, where a whopping 8.5% reduction shows this untouristy but beautiful region close to the Pyrénées, with its temperate summer climates, may turn out to be a sound long-term investment with properties still on the market at very low prices.

Property market research by analysts at Tinsa points to 2016 being a year of home values levelling out rather than shooting up again – increases are not likely to be dramatic, but have stopped plummeting, meaning major losses on purchases look unlikely but any gains will be long-term rather than immediate.

Price rises were seen in more areas than price falls, however – 21 provinces, mostly those home to Spain's largest cities or mature tourism and expat belts – experienced slight increases in 2015, a situation seen in 15 provincial capitals, whilst reductions of 5% or more were witnessed in nine provinces and 10 capitals, showing the latter may be the areas to monitor for those considering an investment in the near future.

For the first time in eight years, new builds began to increase in price – whilst in 2014, they dropped by 2.2%, albeit a much more marginal decrease compared with previous years, in 2015 they went up by 2.9% - something not seen since before the start of the financial crisis.

Second-hand properties saw greater price increases in Spain's two main cities, Madrid and Barcelona, but new builds were also up with rises of 6.2% and 4.8% respectively.

Sales in both metropolitan areas rose, largely due to a steady increase in foreign buyers investing in second homes or properties to rent out.

Overall, second-hand homes fell by 0.7% in value in the fourth quarter of 2015, but the winter frequently sees price reductions since spring and summer are peak buying times.

Year-on-year increases were highest overall in the Balearic Islands, where homes continue to be among the priciest in the country given that this is a highly sought-after region – typical sale proceeds on these properties were 3.3% higher at the end of 2015 than at the same time in 2014.

The Canary Islands saw the second-highest growth by the close of 2015 compared with the end of 2014, at 1.9%, followed by Madrid at 1.6%.

Areas far less marked by tourism and expatriate communities, such as the colder northern region of Asturias, the central plains of Castilla-La Mancha and the land-locked western region of Extremadura, witnessed significant price reductions – of 6%, 6.6% and 6.4% respectively.

The most popular areas for foreign buyers, especially those seeking holiday homes or properties to let short-term to tourists, are found along the coasts – mainly the east and south – and the islands, all areas where prices are showing subtle rises both with new builds and second-hand villas and apartments.