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'Huge' annual home-price hikes – especially in these five provinces
21/05/2023
RESIDENTIAL property prices have increased year on year at the highest level seen since August 2006 – although this national average is skewed by five provinces in Spain where home values have soared dramatically, according to recent statistics.
As at the end of April – the most recent full month for which figures are available – the annual price rise on average was 10%, putting the typical figure for Spain at over €2,100 per square metre.
To give a practical example, a standard medium-sized apartment with two or three bedrooms would be between approximately 70 and 90 square metres, giving a typical market value of €147,000 to €189,000.
This hike in purchase price is the largest recorded in nearly 17 years, but property specialists expect demand to tail off slightly in the next few months, bringing market values back to a 'more stable level'.
'Average price' on a wide spectrum
In reality, an 'average price' for the country as a whole gives very little information to potential buyers – in fact, even an 'average price' for one specific town only tells a small part of the story. Location, property type, and local services, together with how sought-after or otherwise a given province, town or even neighbourhood is, means the actual asking price for a home can vary considerably. Two identical houses or apartments for sale, just one or two streets apart, can have vastly different market values.
Price rise also differs greatly depending upon whether the property is a new build or second-hand – the definition that covers any home that has ever been lived in before, even if it was constructed relatively recently.
And the latest figures show that the average second-hand home price rise in the past year presents major gulfs between provinces, with some having gone up in value by up to 25 percentage points more than others.
Price hikes are very different across Spain – in fact, in three provinces, they have actually gone down in the last 12 months.
Where the largest leaps in home prices are
The biggest increases since April 2022 are seen in the Balearic Islands, with an eye-watering 25.6% surge in market values.
In fact, the top two regions with the greatest rises are both offshore – the Canary Islands have seen huge hikes, particularly in the province of Santa Cruz de Tenerife.
This – one of two Canarian provinces, the other being Las Palmas – encompasses the islands of Tenerife, La Palma, La Gomera, and El Hierro, four of the region's eight, and here, asking prices for properties, and final selling prices, have shown a year-on-year rise of 21.5%.
It may come as little surprise that the highest increases in residential property values are seen in provinces with hugely-popular beach holiday destinations – in addition to the Canaries and Balearics, the provinces of Alicante and Málaga, whose coasts are known as the Costa Blanca and Costa del Sol respectively, have witnessed the largest climbs in home prices in the last year.
But Costas and islands are not the only areas with rocketing market values for homes – Alicante and Málaga are level-pegging with the northern land-locked Navarra, a single-province region close to the Pyrénées and the Basque Country, of which the capital is Pamplona.
In the cases of all three mainland provinces with the greatest home value increases, these are well above the national average, but considerably lower than either of the island regions; they all experienced a rise of about 15% based upon figures for April 2022.
Home prices fall in these provinces
Although none of the areas where market values have dropped in the past year are on the coast, one of them is in a coastal region – Ourense is the only land-locked province out of the four in the far north-western Galicia, and a typical second-hand home for sale there will be 0.3% cheaper than in April 2022.
The other two are in the centre-northern region of Castilla y León where, in the province of Zamora, a similar fall has been seen, with homes 0.4% cheaper than a year ago.
Both Ourense and Zamora border directly onto Portugal, but the province of Palencia is farther to the east – and here, buying a residential property now costs 2.4% less than last year.
The most expensive and the cheapest parts of Spain
In addition to having seen the steepest price rises in the previous year, the Balearic Islands are now the province – and region – where buying a home requires the biggest budget. Recent figures show that the average price per square metre is €3,666.
According to our previous example, then, an apartment of 70 or 90 square metres would cost a typical €256,620 to €329,940. But again, this will vary vastly depending upon which island, and where on that island, you are planning to buy – an inland mountain village in Menorca would not command the same price as, say, a trendy seafront esplanade, the waterfront in Palma de Mallorca, or near a yacht club in Ibiza popular with international celebrities.
After the Balearics, the most expensive homes are found in Madrid – not just the capital city itself, but in the wider single-province region. Residential property purchase and rental prices in Madrid have long been a bone of contention for the ordinary worker, especially younger adults, although they remain cheaper, on the whole, than in most western European country capitals. In fact, some of the commuter towns in the Greater Madrid region can be far more expensive than the metropolitan area: At any one time, the town with the highest average income per head in Spain is usually Pozuelo de Alarcón, home to national celebrities including premier-league footballers, and nearby Boadilla del Monte is frequently in the top four wealthiest municipalities in the country.
Anywhere in the Madrid region, though, the average price for buying a home currently sits at €3,438 per square metre.
Third-most expensive in Spain is the province of Guipúzcoa, in the Basque Country, of which the capital is the coastal Film Festival city of San Sebastián. Here, the average home currently costs €3,248 per square metre.
Only one province in Spain has an average price per square metre of below €1,000 – and it borders onto that of Madrid. Ciudad Real, in the centre of the country and just north of Andalucía, is where you'll find the country's cheapest homes, according to the latest figures – at €967 per square metre.
This means our earlier illustration, of an apartment of 70 or 90 square metres, would cost a typical €67,690 or €87,030.
Additional costs on top of the property price
As a general rule, whenever a buyer is calculating their budget, they are usually advised to factor in an extra 12.5% on top of the sale price, if they need a mortgage.
For those buying outright, without a loan, the added costs are lower – the actual amount depends upon region.
When purchasing a second-hand home, the new owner is required to pay the asset transfer tax, or Impuesto de Transmisiones Patrimoniales, which – according to the financial information website HelpMyCash – can be anything from 4% to 10% of the buying price.
This said, each of Spain's self-governing regions offers some reductions for specific circumstances – such as age, either the under-35s or over-65s; for first-time buyers; or for buying a home in a particular area. This may be true of small, remote villages in the countryside, since these municipalities are frequently under threat of extinction due to being too far for working-aged adults to commute, meaning their populations dwindle as their residents age. Regional governments may offer a substantial discount on asset transfer tax for purchasing in a home in high-risk depopulation zone, as new buyers mean new residents, and an increase in headcount.
Related Topics
RESIDENTIAL property prices have increased year on year at the highest level seen since August 2006 – although this national average is skewed by five provinces in Spain where home values have soared dramatically, according to recent statistics.
As at the end of April – the most recent full month for which figures are available – the annual price rise on average was 10%, putting the typical figure for Spain at over €2,100 per square metre.
To give a practical example, a standard medium-sized apartment with two or three bedrooms would be between approximately 70 and 90 square metres, giving a typical market value of €147,000 to €189,000.
This hike in purchase price is the largest recorded in nearly 17 years, but property specialists expect demand to tail off slightly in the next few months, bringing market values back to a 'more stable level'.
'Average price' on a wide spectrum
In reality, an 'average price' for the country as a whole gives very little information to potential buyers – in fact, even an 'average price' for one specific town only tells a small part of the story. Location, property type, and local services, together with how sought-after or otherwise a given province, town or even neighbourhood is, means the actual asking price for a home can vary considerably. Two identical houses or apartments for sale, just one or two streets apart, can have vastly different market values.
Price rise also differs greatly depending upon whether the property is a new build or second-hand – the definition that covers any home that has ever been lived in before, even if it was constructed relatively recently.
And the latest figures show that the average second-hand home price rise in the past year presents major gulfs between provinces, with some having gone up in value by up to 25 percentage points more than others.
Price hikes are very different across Spain – in fact, in three provinces, they have actually gone down in the last 12 months.
Where the largest leaps in home prices are
The biggest increases since April 2022 are seen in the Balearic Islands, with an eye-watering 25.6% surge in market values.
In fact, the top two regions with the greatest rises are both offshore – the Canary Islands have seen huge hikes, particularly in the province of Santa Cruz de Tenerife.
This – one of two Canarian provinces, the other being Las Palmas – encompasses the islands of Tenerife, La Palma, La Gomera, and El Hierro, four of the region's eight, and here, asking prices for properties, and final selling prices, have shown a year-on-year rise of 21.5%.
It may come as little surprise that the highest increases in residential property values are seen in provinces with hugely-popular beach holiday destinations – in addition to the Canaries and Balearics, the provinces of Alicante and Málaga, whose coasts are known as the Costa Blanca and Costa del Sol respectively, have witnessed the largest climbs in home prices in the last year.
But Costas and islands are not the only areas with rocketing market values for homes – Alicante and Málaga are level-pegging with the northern land-locked Navarra, a single-province region close to the Pyrénées and the Basque Country, of which the capital is Pamplona.
In the cases of all three mainland provinces with the greatest home value increases, these are well above the national average, but considerably lower than either of the island regions; they all experienced a rise of about 15% based upon figures for April 2022.
Home prices fall in these provinces
Although none of the areas where market values have dropped in the past year are on the coast, one of them is in a coastal region – Ourense is the only land-locked province out of the four in the far north-western Galicia, and a typical second-hand home for sale there will be 0.3% cheaper than in April 2022.
The other two are in the centre-northern region of Castilla y León where, in the province of Zamora, a similar fall has been seen, with homes 0.4% cheaper than a year ago.
Both Ourense and Zamora border directly onto Portugal, but the province of Palencia is farther to the east – and here, buying a residential property now costs 2.4% less than last year.
The most expensive and the cheapest parts of Spain
In addition to having seen the steepest price rises in the previous year, the Balearic Islands are now the province – and region – where buying a home requires the biggest budget. Recent figures show that the average price per square metre is €3,666.
According to our previous example, then, an apartment of 70 or 90 square metres would cost a typical €256,620 to €329,940. But again, this will vary vastly depending upon which island, and where on that island, you are planning to buy – an inland mountain village in Menorca would not command the same price as, say, a trendy seafront esplanade, the waterfront in Palma de Mallorca, or near a yacht club in Ibiza popular with international celebrities.
After the Balearics, the most expensive homes are found in Madrid – not just the capital city itself, but in the wider single-province region. Residential property purchase and rental prices in Madrid have long been a bone of contention for the ordinary worker, especially younger adults, although they remain cheaper, on the whole, than in most western European country capitals. In fact, some of the commuter towns in the Greater Madrid region can be far more expensive than the metropolitan area: At any one time, the town with the highest average income per head in Spain is usually Pozuelo de Alarcón, home to national celebrities including premier-league footballers, and nearby Boadilla del Monte is frequently in the top four wealthiest municipalities in the country.
Anywhere in the Madrid region, though, the average price for buying a home currently sits at €3,438 per square metre.
Third-most expensive in Spain is the province of Guipúzcoa, in the Basque Country, of which the capital is the coastal Film Festival city of San Sebastián. Here, the average home currently costs €3,248 per square metre.
Only one province in Spain has an average price per square metre of below €1,000 – and it borders onto that of Madrid. Ciudad Real, in the centre of the country and just north of Andalucía, is where you'll find the country's cheapest homes, according to the latest figures – at €967 per square metre.
This means our earlier illustration, of an apartment of 70 or 90 square metres, would cost a typical €67,690 or €87,030.
Additional costs on top of the property price
As a general rule, whenever a buyer is calculating their budget, they are usually advised to factor in an extra 12.5% on top of the sale price, if they need a mortgage.
For those buying outright, without a loan, the added costs are lower – the actual amount depends upon region.
When purchasing a second-hand home, the new owner is required to pay the asset transfer tax, or Impuesto de Transmisiones Patrimoniales, which – according to the financial information website HelpMyCash – can be anything from 4% to 10% of the buying price.
This said, each of Spain's self-governing regions offers some reductions for specific circumstances – such as age, either the under-35s or over-65s; for first-time buyers; or for buying a home in a particular area. This may be true of small, remote villages in the countryside, since these municipalities are frequently under threat of extinction due to being too far for working-aged adults to commute, meaning their populations dwindle as their residents age. Regional governments may offer a substantial discount on asset transfer tax for purchasing in a home in high-risk depopulation zone, as new buyers mean new residents, and an increase in headcount.
Related Topics
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