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Anyone looking to buy a home in Spain will know it’s far from easy at the moment. September has seen prices continue their relentless rise, with a year-on-year increase of 6.9%. The average price now sits at €2,047 per square metre for both new builds and resale properties.

 

What’s driving this surge? Experts put it down to two main factors: improved financing options and a chronic lack of housing supply, despite signs of some recovery this year.

 

The Spanish property market is as varied as ever, with major differences from region to region. The Balearic Islands, for example, have registered the largest annual price increase, at 8.5%, and hold the second highest cost per square metre at €2,871, beaten only by Madrid’s eye-watering €3,281. By contrast, Extremadura remains the most affordable spot in Spain, where average prices come in at €993 per square metre, and with the gentlest year-on-year increase of just 3.7%.

 

Easier access to mortgages and stable interest rates have played a big part in keeping the market hot. “The reactivation of mortgage lending and stable interest rates are helping to accelerate transactions and anticipate purchase decisions, intensifying the increase in home prices,” explains Consuelo Villanueva, an advisor at Sociedad de Tasación.

 

There’s also more confidence among buyers and sellers. The Real Estate Confidence Index reached 58.9 points out of 100 in the third quarter, 10.8% higher than last year and even better than the previous record set in 2018. However, the cost of new construction continues to rise, up 3.76% year-on-year to €1,323 per square metre, further adding to the squeeze.

 

For those crunching numbers, the so-called Real Estate Effort Index, which shows just how many years of full wages are needed to buy a home, has climbed to 7.6 years, a 2.4% annual jump. This backs up what we reported previously: many buyers are being pushed to rent instead, forced out of the market by rising costs and limited choices.

 

In short, there’s no sign of a slowdown in prices, and with mortgages temporarily easier and supply short, pressure on buyers looks set to continue into next year.

 

 

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