The price of housing has risen 8.4% in May compared to a year ago, driven by the rise in prices in capitals and large cities and in their metropolitan areas, according to data published yesterday by the appraiser Tinsa. Housing, both new and used, has seen nine consecutive months of price increases, with April and May growing at rates of more than one percent each month. The pressure on prices is a consequence of an increase in transactions – they have grown by 26.7% in the first quarter compared to the same period of the previous year – while available flats are falling. According to data from Tinsa, the main real estate portals have fewer homes for sale: 7.17% less than a year ago.
Tinsa highlights that the rate of increase of 8.4% is the highest since the real estate boom at the beginning of the century and has accelerated steadily in the last 11 months. Housing, thus, has fully recovered from the declines it suffered in mid-2020 due to the effect of confinement. Prices are now at the level of mid-2011. Since the low recorded after the financial crisis, in February 2015, they have risen 31%, but are still 21.9% below the highs of the bubble that marked end of 2007.
The capitals and large cities were the ones that registered the highest monthly increase in housing prices in May, 1.2%, followed by metropolitan areas (1.1%), the rest of the municipalities (1%) , the Mediterranean coast (0.2%) and the islands (0.1%). In the interannual rate, the greatest increase compared to May 2021 has been suffered by housing in metropolitan areas (8.9%). They are followed by the rest of the municipalities (8.8%), the capitals and large cities (8.2%), the Mediterranean coast (6.8%) and the islands (4.7%).
Cristina Arias, director of studies at Tinsa, highlighted that “the capitals and metropolitan areas, which were the ones that took the longest to recover pre-pandemic prices, are the ones that grow the most intensely in May.”
Real estate sources recalled that the strength of demand is maintained by a change in the preferences of citizens after the pandemic; the savings accumulated during confinement; the intention of anticipating the foreseeable rise in interest rates, and due to the impact of inflation, which leads to the search for investment alternatives in real assets.
In any case, Arias warned that in the coming months it is foreseeable that the demand for housing will slow down, “thereby softening the increase in prices.” In his opinion, the persistence of inflation will erode the purchasing power of families and will harden the granting of mortgages that, in addition, will be more expensive due to the rise in rates by the central banks.
