Spanish house prices will rise for the fifth consecutive year in 2018, forecasts the Instituto de Práctica Empresarial (IPE), a property-focused business school.
The Madrid region will see the highest increase with a 10.8% rise, followed by Castilla y León with an 8% increase and the Canaries with 7.7%. Catalonia, once the market leader, will slow down to a 4.9% rise due to political tension.
Nationwide, property prices will go up by 6.1% in 2018, the fifth consecutive year of increases. This forecast comes from IPE’s 25th edition of their Property Outlook report, reported in the Spanish financial daily Expansión.
Average property prices will end 2017 at €151,215, 9% more than in 2016, forecast IPE. Increases will therefore accelerate sharply in Q4 since they went up by 6.7% in Q3, according to recent figures published by the Spanish Statistical Institute (INE). During 2018, average property prices will reach €160,438, the highest since 2011.
Peak-to-trough and back
Between 2008 and 2013, property prices plummeted by over 30%. Between 2014 and 2018 they will have gone up by over 21%, according to IPE estimates. There’s still room for further rises and the trend is positive, driven by the economy and a big appetite for Spanish property among foreign investors. And this is despite the temporary slow-down in the Catalan property sector.
The Madrid region will lead prices rises with an increase of 10.8%. This is due to the impetus in the capital, currently experiencing several quarters of price hikes because of strong demand and lack of building land. Madrid will be followed by Castilla y León (up 8%), the Canaries (up 7.7% and Andalusia (up 7.1%), all above the national average.
Average property prices to rise in all regions
Catalonia, which had until now led property price rises, will see a slow down to 4.9% because of a sharp drop in sales, according to the IPE. The Catalan scenario could change depending on the political situation.
Although all regions will see price increases in 2018, some will see almost zero rises as is the case in La Rioja and the Basque Country, both with 0.9% increases.
Extremadura is the cheapest region with average prices of €73,062, which will rise by 3.3% next year to €76,066. Castilla-La Mancha is the second cheapest region with a current average of €82,971 and a forecast €84,893 in 2018, up 2.3%.
Next year will be the fifth in a row of price growth after seven years of falls. In 2014, average square metre prices rose by 0.1%; in 2015, by 3.7%; in 2016, by 4.7%, according to real price statistics from the OECD.
Together with this increase and next year’s 6.1%, property prices will return to those seen at the end of 2004 and the beginning of 2005 when the property boom was in full swing. OECD figures show that properties are still 9.5% cheaper than in 2005, a year used as a benchmark. If the current trend continues, prices will reach 2005 levels in 2019.