The Real Estate Market in Spain in 2024: A Year of Growth and Optimism

The Spanish real estate market has shown signs of sustained growth in the first half of 2024, according to the recent Real Estate Sector Trends Report published by the Sociedad de Tasación. Below are the highlights of the report and what they mean for the Spanish real estate market.

Growth in New Home Prices

The average price of new housing in Spain reached 2,930 €/m² in June 2024, marking a year-on-year increase of 4.3%. Although growth continues, a moderation in the rate of increase has been observed for the sixth consecutive quarter. This phenomenon reflects a market that, although expanding, is adjusting to a new normal after a period of accelerated growth.

Regional Price Variations

All autonomous communities have recorded increases in new home prices, although with significant variations. The lowest increases were observed in Castilla-La Mancha (2.2%), while the Balearic Islands led with a 5.7% increase. Major cities such as Barcelona and Madrid continue to show the highest prices, reaching 5,262 €/m² and 4,493 €/m², respectively.

Market Analysis in Barcelona, Madrid, Marbella, and Mallorca

Barcelona

Barcelona continues to be the city with the highest average new home price nationwide, reaching 5,262 €/m² in June 2024. Demand in this city remains strong, driven by its appeal as a cultural, economic, and tourist center. Despite high prices, the supply remains limited, contributing to upward pressure on prices. The city also stands out for its growing interest in sustainable and energy-efficient homes.

Madrid

Madrid, with an average price of 4,493 €/m², remains one of the most dynamic markets in Spain. The capital benefits from being the political and economic center of the country, attracting both national and international buyers. The city has seen a year-on-year growth of 5.2%, driven by robust economic recovery and improved financing conditions. However, like in Barcelona, the limited supply of new homes remains a challenge.

Marbella

Marbella, known for its luxury market, continues to attract high-net-worth buyers, both national and international. Prices in this area have shown a significant increase, reflecting high demand for luxury properties and limited supply. Marbella is particularly popular among foreign buyers looking for a second home in an exclusive destination with favorable weather and excellent quality of life.

Mallorca

Mallorca, with a 5.7% growth in new home prices, is the autonomous community with the highest year-on-year increase. The island remains a highly attractive destination for international buyers, especially Europeans, seeking both permanent residences and vacation properties. The combination of natural beauty, quality of life, and luxury offerings continues to drive demand. Prices in Palma de Mallorca have reached new historical highs, consolidating its position as one of the most exclusive markets in Spain.

Additional Factors in the Real Estate Market in 2024

Difficult Access to Housing

Access to housing remains a significant challenge for many Spaniards. The difficulties not only affect home purchases but also rentals, leading to an increase in unconventional housing alternatives. These include the rise of new "Living" forms of housing and the increase in temporary rentals.

Growth in Temporary Rentals

According to a report by Idealista, the supply of seasonal rentals has increased by 56%, representing 11% of the total in the first quarter of 2024. This trend has led the government to announce a royal decree to amend Article 3 of the Urban Leasing Law (LAU) regarding seasonal rentals, requiring causality to be justified to formalize the contract. Housing Minister Isabel Rodríguez noted that this measure aims to curb the rise in temporary rentals, which is straining the residential rental market and contributing to price increases.

Rise in Room Rentals

The supply of rooms for rent has also experienced significant growth, increasing by 43% in the first quarter of the year. This phenomenon is particularly pronounced in cities like Albacete, Castellón de la Plana, Córdoba, Alicante, and Almería, with increases ranging from 102% to 249%. The price of rooms for rent has risen by 3%, reaching 400 euros per month. The cities of Madrid, Barcelona, Valencia, and Seville concentrate more than 50% of the room rental offers.

Increase in Used Home Prices

The price of used housing in Spain increased by 6.18% in the first half of 2024 compared to the previous year, according to data from Grupo Tecnocasa and the Universitat Pompeu Fabra (UPF) in Barcelona. Although prices are at levels similar to the second half of 2004, they are still far from the historical high of the second half of 2006.

Optimism in the Sector

The Real Estate Confidence Index has exceeded the 50-point barrier for the first time since September 2022, standing at 52 points at the end of the second quarter of 2024. This increase reflects renewed confidence in the sector, driven by economic recovery and more favorable monetary policy by the European Central Bank (ECB).

Accessibility and Financing

The Accessibility Index has also improved, reaching 78 points, indicating a better balance between housing prices and citizens' borrowing capacity. This improvement is partly due to the recent reduction in interest rates by the ECB and a slight decrease in financing costs.

Increase in Construction Costs

The cost of new construction has increased by 9.1% over the past twelve months, reaching 1,310 €/m². This increase reflects the challenges developers face in a market with high demand and limited supply.

Energy Efficiency

A positive aspect highlighted in the report is the improvement in the energy efficiency of new homes. 51% of the homes promoted in the first half of 2024 have achieved the highest energy efficiency rating. This advance not only benefits the environment but also aligns with the growing demands of buyers for sustainable homes.

Conclusions

The real estate market in Spain in 2024 is in a phase of moderate and sustained growth, with renewed confidence in the sector and improvements in accessibility. However, challenges persist, particularly in terms of construction costs and limited supply. The trend towards more sustainable and energy-efficient homes is a positive aspect that could define the future of the market.

For those interested in the Spanish real estate market, whether as buyers, investors, or industry professionals, the coming months promise to be interesting and full of opportunities. The key will be to stay informed and adapt to emerging trends.