The real estate market is a kind of journey to the center of the Earth in which, as you move forward, the pressure increases. And if the real estate world has a center, it is that of the big cities, with Barcelona and Madrid at the forefront, where demand is greatest and, with it, resistance to falling prices. However, there are already signs and opinions that point to the opposite after the continued increases in recent years.
“It seems to us that the average prices of offices must end up falling by 20%, and those of housing, by 7%,” says Singular Bank’s head of strategy, Roberto Scholtes, when asked about Barcelona and Madrid. “The market is very dry” because now “the buyer and the seller do not meet”, he says. They will meet at some point and the forecast is that it will be over the course of next year, in a cheaper place than the current one.
Scholtes’ forecasts of falling prices are not the only ones, although there is no firm consensus among analysts, especially when it comes to Barcelona and Madrid, the two cities with tense areas par excellence. On a national scale, Bankinter’s forecast is that this year the price of housing will increase by 1.2% and will drop by 2% next year. These are subtle fluctuations when compared to other European countries, where economic contraction and interest rate hikes directly affect a real estate market that is this time more overheated than the Spanish one.
The latest quarterly report from the College of Registrars, published this week, shows that the average price per square meter in the city of Barcelona is now 4,318 euros, 0.8% lower than a year ago, while in Madrid continues to see increases, of 4.3%, although the square meter is cheaper at 4,017 euros. At the end of last year, prices rose by 6.3% in Barcelona city and by 7.1% in Madrid, which shows that, at the very least, the slowdown is evident.
Where the registrars already detect declines is in the quarterly comparison, although in this case the data does not correspond to the capitals, but to the province. In Barcelona, ??between July and September there was a drop of 0.6% compared to the previous quarter, while in Madrid the drop was 0.8%.
The recorders give another clue about what is happening in the two most important Spanish cities. The capitals have reduced the weight of housing sales compared to their respective provinces, after several quarters of increase. It is a sign that demand is moving to the extra-radius, where prices are already starting to cool. There is no longer so much willingness to pay high prices.
In the case of offices, Scholtes detects a much more noticeable trend. Transactions, he indicates, have fallen by 72% in Barcelona and by 34% in Madrid. “Sellers are reluctant to lower prices, but buyers are already patiently waiting for the adjustment to arrive”, predictably in the first half of next year, he says.
In terms of housing, Idealista continues to detect increases in Barcelona and Madrid, although the data is for properties that are for sale and not for those that have finally been sold. They measure desire more than reality. In case there are price drops, the developer Culmia believes that they will be small. His forecast is more of “stability”, since in the center of the real estate market, in the urban cores of both cities, he says, there is still little supply.
