Feb 1, 2023
Spanish Housing Defies Global Trend as Prices Increase by Most in 17 Years
(Bloomberg) -- Spanish house prices posted their biggest annual increase since the boom period before the global financial crisis, after a surge in demand from buyers rushing to avoid paying higher interest rates.
Prices jumped 9% in January from a year earlier, according to a monthly index compiled by Fotocasa, a real estate website. That was the sharpest rise since September 2006. The most expensive city was San Sebastian in the Basque region, followed by Barcelona and the capital, Madrid.
“We had never detected such a large price increase in such a short period of time,” said María Matos, a spokesperson for Fotocasa. “This increase brings us back to 2006 levels, prior to the real estate bubble when the cost of housing suffered a great increase.”
Much of the jump comes down to financing. The Spanish mortgage market has among the highest proportions of variable-rate loans compared with fixed-rate debt in Europe. With borrowing becoming costlier, potential buyers are rushing to find houses while they can afford it just as supply of new builds has diminished due to higher costs and labor shortages.
Spanish prices also tend to be impacted by foreign demand for coastal properties. In January, the region with the biggest increase was the Balearic Islands, rising 16.5%. In the Madrid region, by comparison, prices were up 9%.
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