Recently, people have become more aware that the property prices in Barcelona, and Spain, in general, have been increasing. And so, there have been many questions surging in relation to the real estate market. Why are the prices in Barcelona increasing so dramatically? What implications does this have on the housing market? All of which, this article will serve to answer these questions…
The following graph, taken from trading economics, represents the property prices from the last 10 years in Spain. This graph is quite useful to see the pricing bubble of the real estate market in 2008, as well as the more recent declines and accruals. The decline perfectly shows how the Spanish Real Estate market began to recuperate from the “bubble”. At which point, at the lowest point in 2014, the prices began to increment steadily once again.
Because of these increasing figures, there has been much debate amongst the web regarding a new real estate bubble. These arguments, however, are based on pure speculation and most analyses conclude that these predictions are extremely premature. This is especially the case given that, as you can see from the graph, the prices are increasing at a very slow pace.
There are still many “ghost” buildings around Spain. These ghost buildings are those constructions that were never completed during the crisis. This means that there is a lot of empty and unfinished property supply that is lurking about the Spanish real estate market. In general, it is fair to say that this excess supply could dampen the price of properties in Spain.
Recently, the market has seen a shift in consumer attitudes. More individuals are willing to rent properties, rather than investing in a property. The nature and flexibility of a property rental seems to be an attractive factor for the younger generation. This means that there is a lack of demand which could also impact property prices; especially, combining this lack of demand with excess supply.
The property prices in Barcelona, however, are a whole other ball park…
Barcelona’s average price per square meter had increased to 4123€ in the first quarter of 2017. This price is beyond spectacular; this means that Barcelona’s property prices have now almost increased to the same level as the highest priced quarter during the crisis (4732€ in first quarter of 2007).
Taking Eixample Dret as an exemplary neighborhood, the prices have increased by 20.01% from the third quarter of 2015 to the first of 2017. What’s more, the price for Eixample in the first quarter of 2017 exceeds Barcelona’s average high quarter by 154€ per square meter (4886€) . Sitges, a town outside Barcelona, has even experienced a rise in prices from 3500€ to 4210€ (first quarter of 2016 to 2017). These increments are remarkable! It is clear that Barcelona’s property market is growing at a fast pace.
|Antiga Esquerra||3.677,00 €||3.651,00 €||3.760,00 €||4.077,00 €||4.266,00 €||4.186,00 €||4.502,00 €|
|Eixample Dret||3.904,00 €||3.861,00 €||4.232,00 €||5.278,00 €||5.286,00 €||4.918,00 €||4.886,00 €|
|Poblenou||3.239,00 €||3.235,00 €||3.398,00 €||3.689,00 €||3.689,00 €||3.665,00 €||3.733,00 €|
|Sagrada Familia||3.007,00 €||2.898,00 €||3.020,00 €||3.368,00 €||3.368,00 €||375,00 €||3.451,00 €|
|Sant Antoni||2.995,00 €||3.034,00 €||3.088,00 €||3.440,00 €||3.440,00 €||3.505,00 €||3.413,00 €|
Information Source: Api Catalunya
Barcelona draws a lot of tourism from across the world. The combination of sun, city and sea seems to be the ultimate attraction to many tourists; so much so that most of Barcelona’s new property buyers consist of foreigners. This is quite simply due the fact that prices are so high in Barcelona that a local citizen would struggle to foot the bill. Many locals must keep asking themselves the same question; why are these prices continuing to rise so dramatically?
With a basic application of economics, it is understood that these rapid accruals within the city are due to supply and demand. Quite simply, there is not enough supply of properties to meet the demand of the consumer. This means that the seller is able to charge any price for their property because the demand will still withstand. This could explain the current prices within Barcelona’s property market; alongside with the undeniable effects of Speculation.
In Layman’s terms, speculation is all about the different assumptions that individuals make upon different economic markets. These assumptions are usually based on whether or not the market value [property prices] will be increasing or decreasing. There are, of course, both benefits and drawbacks to speculation; but, in terms of Real Estate, it derives a very negative connotation. As mentioned previously, most people associate speculation with economic bubbles. What could this mean for the property prices in Barcelona? Or, more generally, what could it mean for Spain?
Speculation within the Real Estate sector could encourage buyers. The willingness of buyers to purchase property could be relatively high, as they would be investing in the light of making a promising profit. Simple economics explain that if the demand is superior to the supply, the prices within the market will continue to increase. This means that the market enters into a vicious cycle of speculative demands.
Will these speculative demands continue to impact the property prices in Barcelona? We have already seen some major price increases; and so, it is very possible that these accruals will continue within Barcelona’s Property Market.
We hope this blog has provided you with all the information that you need about Barcelona’s current property prices. You can also check out our sale listings for more information on prices within Barcelona.
The SuiteLife Team.