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The price of housing in Spain continues its upward trend: Up 4.5% in the third quarter

The Spanish real estate market continues its upward trend, with a 4.5% increase in the price of housing during the third quarter of this year, as revealed by the National Statistics Institute (INE) in its recently published data. This increase is in addition to the 11% rise in new construction during the same period, marking the largest increase in the last 16 years and contributing to the resilience of housing prices in general. 

Despite expectations of a possible influence of European Central Bank (ECB) monetary policy on housing costs, the reality is that this upward trend shows no immediate signs of slowing. Although there is a slowdown compared to the previous year, analysts suggest that it will take more time and more quarters to see a significant decline. Buying a home in Spain remains more expensive than the previous year, affecting all autonomous communities equally. With an increase of 4.5% over the previous quarter, this increase marks 38 consecutive quarters of year-on-year growth, accumulating an increase of 5.3% so far this year. 

The new home segment acts as an obstacle to the moderation in transactions and mortgage signings, as its price experienced a notable increase of 11% in the third quarter, surpassing the 7.7% of the previous quarter and the 6% of the first quarter. This increase has not been seen since the third quarter of 2007. Real estate developers argue that there is no justification for a reduction in prices of newly built homes, as supply is scarce and demand far exceeds production capacity, which stands at around 110,000 units per year. 

María Matos, Director of Studies at Fotocasa, highlights that inflation, affecting the cost of materials, production and logistics, together with low production levels, contribute to the continued increase in prices. In contrast, the price of used homes, representing more than 80% of transactions, has maintained greater stability, with an increase of 3.2% in the third quarter compared to the same period last year. The cumulative increase for the year was 4.7%. 

The data reveal variations in the rates of price increases in the different autonomous communities, with Navarra, the Canary Islands and Cantabria registering the highest increases. In contrast, Castilla La-Mancha, Extremadura and La Rioja show more moderate increases. Madrid (4.1%) and Catalonia (3.8%) are below the national average. The INE index, based on the 2015 financial year as a reference, shows that housing has experienced a steady increase since 2013. In quarterly terms, housing prices experienced their highest rise since the first quarter of 2022, with new housing leading this increase. 

In summary, the Spanish housing market continues to defy expectations of a slowdown, highlighting the strength of demand and challenges in new home production as key factors in the persistence of rising prices.