Like many areas around the world, Spain’s real estate market has had a lot to endure since the turn of the new decade and, indeed, the millennium. For instance, the Great Recession of 2007-2009 was caused largely by the collapse of housing bubbles and produced a GDP slump of 2-4% in Spain, as well as a 40% reduction in house prices.
Then, everything was (mostly) fine until 2020, when the Idealista website predicted a 10% fall in real estate costs at the beginning of the year.
A Divided Industry
In reality, Statista indicates that the worst-hit areas in 2020 were La Rioja (-15.9%) Aragon (-11%), and Extremadura (-10.2%). Only one of seventeen autonomous communities and two autonomous cities posted a positive growth figure in 2020, namely, Melilla, a Spanish city in northern Morocco, which saw an overall boost of 1.3%.
Given such a widespread collapse in the real estate market, it’d be understandable if analysts remained cagey about Spain’s prospects – and they did.
Closer to the present, in 2023, Spain experienced a bit of a divided industry, where demand was high, supply was low, and mortgages were scarce. All this spoke of a housing market that was still feeling the ripples of the boulder that 2020 launched into the lake, metaphorically speaking.
Prices climbed by 15% in Alicante, 14% in Valencia, and 7.3% in Spain overall, as properties increasingly became the domain of people with a lot of spare money and newcomers to the ladder were priced out of the market.
This brings us to 2024, where little seems to have changed. There are signs of recovery, of course, as there has been for much of the past half-decade, but early estimates suggest that good times will confine themselves to bigger, more dynamic places, such as Murcia, Lleida, Huelva, and Madrid, all local capitals.
For those buying to rent, few other places offer such a chance at positive returns. Also looking good is Barcelona, a place we’ll take a look at now.
Spain’s Second City
Barcelona is Spain’s second city but, from a real estate perspective, it’s a much smaller place by both population (1.66m people to Madrid’s 3.34m) and attractiveness to buyers. The Catalonian capital ranks seventh overall for house prices, with an average of 2,638 Euros per square meter.
Compare that to Baleares’ 4,083 per sq/m and Guipuzcoa’s 3,505 per sq/m. In fact, Madrid only comes third on this particular list (3,08 per sq/m), suggesting that house prices don’t always follow the lines of increasing population.
There’s a huge range of properties in Barcelona, ranging from traditional houses to city center apartments, both furnished and otherwise, and catering to all needs.
However, the Loca Barcelona website claims that the need for rentals, in particular, will be defined by the type of tenant, from “locals to students, ex-pats, or tourists”. Discussing furnished apartments in Barcelona, the site uses the example of shared apartments, which are ideal for students.
Inevitably, the cost of any property in Barcelona will vary by locale but, as a guide, only about a fifth of apartments in the city can be acquired outright for less than 200,000 Euros. While that’s cheaper than some other famous places around the world, like New York, that price can still prove a bit of a stumbling block for first-time buyers.
Renting often provides a short-term or even permanent solution to the city’s denizens, although, as we’ll soon see, rent in Barcelona is higher per month than the Spanish average.
Most and Least Expensive
In increasing order of cost, the most expensive neighborhoods in Barcelona are Eixample, which, ironically, is known for its students, and Les Corts. In the former case, the rent can reach 1,589 per m/sq. Les Corts, known to soccer fans as the home of C.F Barcelona, averages around 1,500 Euros per sq/m, per month.
At the other end of the scale, places like Sant Marti (around 11.48 Euros per m/sq), Bon Pastor (€12.36 sq/m), and Nou Barris (€14.43 sq/m) represent a few budget options.
Of course, these are also the places where you’re likely to find the most and least expensive properties to buy, respectively. It’s possible to come right down to street level when talking about the price of houses bought upfront.
Paseo de la Bonanova in Gervasi costs up to 6,300 Euros per sq/m, while Avenida Pearson in Pedralbes comes in at 8,500 Euros per sq/m. Expect to spend a similar amount in the city center when hunting along the Paseo de Gracia (7,500 per sq/m) or 6,700 per sq/m in Calle de Bosh y Gimpera, Sarria.
All that considered, Barcelona does offer something for just about everybody – but housing is a little more aggressive towards buyers than renters. Is that likely to change in 2024? As hinted at earlier, places like Murcia, Madrid, Huelva, and Barcelona will lead the growth in Spain’s housing market. So, let’s see how that might come about and whether it will continue beyond the next twelve months.
A Worsening Situation
As with any country, housing prices can be a measure of economic health. In turn, the availability of both buyers and property is shaped by things like government policy. Put another way, real estate doesn’t exist in a vacuum.
For instance, periods of low inventory, such as the situation in Spain during 2023, when there simply weren’t enough houses to go around, are often eased with grants for developers and tax cuts for people interested in buying. Consequently, a slow start to this decade could beget a more active end.
Unfortunately, the LinkedIn blog claims that Spain still has a supply problem (an increase of 4% as of Q3 2023), largely because there were only 80,000 new homes built last year. For comparison, a “healthy” figure is 100,000. For 2024, analysts are predicting a worsening situation, of just 60,000 new builds.
Barcelona’s status as a tourism and tech hub could help it avoid the worst of a residential slump, as commercial spaces pick up the slack, but a possible increase of housing prices by up to to 4.1% could cause the real estate market to contract further, especially with the low number of mortgages out there.
Spain is not a big builder, at least when compared to the rest of the European Union, with the lowest number of houses per 1,000 people in the entire bloc. If this problem continues to haunt Spanish property into the latter half of the decade, the country – and Barcelona – might have a problem on its hands.
After a fraught few years, with the shoots of recovery appearing, 2024 might prove pivotal for Spanish real estate.
