House prices healthy on the Costas and in the islands while city centre homes depreciate. The latest monthly data published by leading Spanish property valuation firm Tinsa report that average market values of homes in this country were 0.9 per cent higher in February 2021 than in the same month last year, despite a 1 per cent fall in the category of “capitals and large cities”.
It is not inconceivable that this slight depreciation in the value of homes in major cities is a consequence of the coronavirus pandemic for two reasons: on the one hand, it could well be a reflection of the changes in preferences caused by the long periods of lockdown and confinement during the coronavirus pandemic, as the availability of private gardens and terraces becomes a priority for many buyers after the long periods of lockdown and confinement over the last year, while on the other hand it is also a fact that for many people the pandemic has resulted in a lowering of their purchasing power, and more affordable properties are generally easier to find outside the major cities of Spain.
At the same time, it appears that property in coastal areas has become more highly valued: over the last 12 months Tinsa observe a 5.1 per cent rise in Mediterranean coastal areas and an increase of 4.7 per cent in the Balearic and Canary Islands. In other categories, minimal year-on-year increases are reported in “metropolitan areas” (+1.2 per cent) and in the catch-all category of “other municipalities” (+0.7 per cent).
In Mediterranean areas the Tinsa valuation index is now at its highest April level since 2012, while in the islands it is necessary to go back to 2010 to find similar figures.
The latest bulletin also contains the monthly “market snapshot”, in which Tinsa highlight reasons to expect upward or downward movements in the value of homes in Spain, summarizing the following indicators among others and clearly illustrating how almost all of them have been distorted by the pandemic:
Sales figures: the latest monthly data (for February) show a 2.1 per cent year-on-year decrease in comparison with the same month before the outbreak of the coronavirus pandemic.
Building licences: the latest monthly data (also for February) show a 14.6 per cent year-on-year decrease.
Mortgages approved: mortgage activity has suffered more severely since the start of the pandemic and the latest monthly data for February show a 12.2 per cent fall.
Unemployment: the latest monthly data (for April) show a 2.1 per cent increase during the last 12 months.
Euribor: the interest rate on which most mortgage repayments in Spain are calculated was -0.484 per cent during April, still very close to its record low.
The low interest rates currently available on mortgage loans ought, in normal circumstances, to be associated with healthy sales figures and upward pressure on market values caused by widespread demand. But the current circumstances are by no means normal, and the surge in unemployment since the pandemic was first detected in Spain a year ago has led to far fewer people being prepared to buy a home.
Source: Spain News Today, May 2021