Market report Q3 2020

Index reflects a year-on-year drop of 0.4% in average prices for completed property (new and resale) in Spain, equating to an average value of €1,361 per square metre. This translates to a 1.6% adjustment compared to Q1 2020, the pre-covid date of reference prior to a second quarter when the consequences of the state of alarm and subsequent lockdown altered market dynamics and representative market values.

Advance data from September suggests that over the last month there has been an additional drop, after a relatively stable August. After a cycle of growth, most regions show negative year-on-year price changes for the first time. All experienced a decrease in average prices compared to Q1 this year.

Average prices went down 3.6% year-on-year in Madrid, falling by 5.8% compared to Q1 2020. Barcelona saw a year-on-year adjustment of -4.7%; the figure is -4.3% when compared to Q1. In regional terms, La Rioja saw the largest decrease in the year (-6.6%) while Extremadura registered the biggest fall (-9%) compared to the start of the year.

The average price for Spain as a whole in Q3 2020 stood at 13.7% higher than its minimum value after the last economic crisis and sat 33.5% below its peak registered during the first decade of this century.

Regions

In year-on-year terms, all regions except for the Balearics, the Canaries and Asturias entered negative territory. La Rioja, Extremadura, Andalusia, and Aragon fell by more than 5%.

When compared to Q1 this year, 11 regions saw a higher decrease, particularly Extremadura, Aragon and Castilla y León where price drops exceeded 8%. Yet again, Asturias, the Canaries and the Balearics (as well as Castilla-La Mancha) showed greater resistance to adjustment and registered decreases of less than 4% compared to Q1.

Provinces

13 provinces maintained higher average values than a year ago (none with increases higher than 5%). Among the rest, Soria, Cuenca, Ávila, Teruel, Almeria and Granada went down by more than 8%.

Compared to figures for Q1 2020, only Lugo and Lleida saw slight price increases while in Cuenca, Teruel, Valladolid and Ávila, prices fell by over 10%.

The higher provincial prices were in Guipúzcoa (€2,427 per m2), Madrid (€2,235 per m2), the Balearics (€2,212 per m2) and Barcelona (€2,073 per m2). The lowest were in Cuenca (€606 per m2), Ciudad Real (€628 per m2) and Teruel (€638 per m2).

Provincial Capitals

The wider range of values in recorded data for provincial capitals shows very significant changes in some cases. Apart from this and as is the case with regions and provinces, the majority of year-on-year price changes were negative and the adjustments compared to Q1 this year even more generalised. Standing out with two-digit price drops for both periods are Ourense, Zamora and Teruel.

The highest per square metre prices were in San Sebastián (€3,511 per m2), Barcelona (€3,190 per m2) and Madrid (€2,856 per m2), followed by Bilbao, Palma de Mallorca and Cádiz (over €2,000 per m2). At the opposite extreme and below €900 per m2 were Lugo, Ávila, Zamora, Teruel, Cuenca, Ourense and Castellón.

Districts in the 5 largest cities

Price adjustments, both year-on-year and half-yearly, were apparent in many districts in Madrid, Barcelona and Zaragoza as well as suburbs in Seville and Valencia.

The most expensive districts in Madrid and Barcelona and with square metre prices in excess of €4,000 were Salamanca, Chamberí, Chamartín, Centro and Retiro (in Madrid), and Sarrià-Sant Gervasi, Les Corts and Eixample (in Barcelona).

Average mortgage and monthly repayments

Spanish households allocate an average of 20.5% of their available family income to the first year of mortgage payments. According to figures from the Spanish Institute of Statistics (INE in Spanish), the average mortgage loan in Spain was €128,169 in Q2 2020 (latest data available). In monthly terms, each mortgage payment averaged €589.

According to statistics for average mortgages in the Spanish provinces published by INE for Q1 this year, the Balearics and Malaga were the provinces with the highest financial commitment (around 25%). At the other extreme, in Soria, Castellón, Huelva, Ciudad Real, Palencia and Lleida it was below 15 %.

In Madrid and Barcelona, the net financial commitment reached 19.2% and 23% respectively. In Madrid, the rate was higher than 25% in the district of Salamanca, mirrored in Barcelona in the districts of Sarriá-Sant Gervasi and Ciutat Vella.

The highest monthly mortgage payments were in Barcelona province (€853), followed by the Balearics (€842) and Madrid (€745), well ahead of the average payments in Lugo (€347), Caceres (€336), Cuenca (€346 euros), Ciudad Real (€348 euros) and Ávila (€353 euros).

Gross rental return

Gross rental return was around 4.5% in Madrid, Valencia, Zaragoza and Seville, while it stood at 4% in Barcelona.

Average rental returns in the districts in these cities were not noticeably different, although the current market situation could lead to changes or shifts in trends in the future.