Both capitals are showing signs of slowdown that started last year and will stabilize in 2024. Even so, there are very strong increases in the districts, especially in Madrid, where seven of them rise by more than 6%.
Apart from the disaster caused by the bursting of the real estate bubble in 2008, the real estate market in big cities like Madrid and Barcelona is very difficult to show significant decreases in prices.Or saying goodbye to a boom today, as it was back then, the consequences would be quite different. In this case, there is no need to fear a deep crisis, but to think about a return to normalcy. How do the country's two biggest cities bid farewell to this boom? In different ways, but with a common element: a slowdown in price increases, which leaves 2022's dizzying increases a little bit off.
Thus, Madrid prices have risen by 6.1% over the past yearAccording to appraiser Dinza, until reaching 3,780 euros per square meter. For its part, Barcelona has also risen, although less revolutions: in the same period the price increase is 3.5%, which is 3,714 euros per square meter. This increase differential compounds the surprise last year when Madrid overtook Barcelona in price per square meter. Compared to historical data, in the first two quarters of 2022, the annual rate in Madrid was more than 10%, while Barcelona was 5%. The result of these strong increases at that time was that many municipalities became more expensive than the capitals, and although some now continue to rise in price, it is already a downward trend.
It is true that these are still significant price increases, especially in the case of Madrid, but it should be taken into account that the result of the boom is evident in other variables such as transactions: In the first three quarters of last year, 10.6% fewer homes were sold in Barcelona than in the same period in 2022, and 18.8% fewer in Madrid., according to data from the Ministry of Housing and Urban Affairs. Additionally, there are factors that distort the data. In this case, the market's return to normal is not as noticeable in price as there are other factors preventing prices from falling further.
Chief among them is that much lower demand than in 2022 still outweighs insufficient supply. A protagonist of four out of every five purchase and sale transactions signed in Spain, finding a second-hand home in a market that meets what buyers are looking for is more difficult today than it was a year ago. Finding a new home is equally difficult, very few are built each year in Spain, currently around 85,000, and the increase in construction costs has risen sharply in recent years. In fact, the valuation association said in a recent report that construction costs have risen by 8.1% in the past year and by 35% since the arrival of Covid. It should be noted that the labor market is developing better than expected and that this ensures a minimum flow of demand in big cities like Madrid and Barcelona. Finally, it's important to note that these data come from appraisals, which may differ from final sales prices, especially when homes are on the market for a little longer than before, prompting owners to be open to discounts.
Madrid can only be seen with a magnifying glass The strongest increase has been in the capital's central districts. Chamberí is 8.3% more expensive, up to 5,497 euros per square meter; Salamanca 7.6%, which allows it to continue as the most exclusive part of the capital with 5,898 euros; And the Latina is a clear exception, because with its 6.6% increase it joins itself in the most expensive three, although its price is clearly lower, at 2,493 euros.
There is one district whose evolution is quite eloquent, which turned out to be very expensive early last year. This is Vigalvaro, which is now almost at the bottom with a 4.3% rise. It is one of the areas of the capital with the greatest urban growth, but it shows clear signs of fatigue, especially if we take into account that most of the sales were recorded before 2023, and now the increase will not be as pronounced as before. .
As for Barcelona, some neighborhoods have already shown practically flat price growth over the past year. Not only that, but it will be negative growth in real terms as they end 2023 with year-on-year inflation rising below 2.9%. There are three in particular that have increased in price by 1.3% over the past year: Now Paris (2,460 euros per square meter), Horta Kinardo (2,984 euros) and Ciudad Vella (3,831 euros). Precisely, these three are the cheapest in the city. On the other hand, the districts with the biggest year-on-year growth in Barcelona were Les Courts, at 4.5% (€4,476 per square metre); San Marti, 4.1% (3,579 euros) and Sant Andreu, 3.9% (3,036 euros). The city's most expensive district, Sarrià-Sant Gervasi, is near the bottom, with a 3% increase. With this, it reaches the limit of 5,000 euros per square meter, although it is very expensive in Madrid.
Its surroundings are no longer very expensive
In the first quarter of 2023, a curious trend began to be noticed: the prices of the two largest capitals rose at an unaffordable rate for many pockets, and houses in the surrounding municipalities also began to rise, sometimes even with a higher increase. In the capital of Madrid and Barcelona. The explanation is that prices in capital cities are already at their historic highs in some neighborhoods. They kicked out the low-income claim, and so, like large municipalities in metropolitan areas, they had to look for more affordable locations. Ironically, it also made housing unaffordable in those cities due to powerful inflation. This trend is ending, because although it is true that there are still many municipalities on the outskirts of Madrid and Barcelona that are growing more than the capitals, there are now fewer of them. To highlight some examples, in the first case Alcorcón (7.8%) and Fuenlabrada (7.7%). Meanwhile, close to Barcelona are Badalona (13.3%), Vilanova i la Geldreu (8.6%), Cerdanyola del Valles (6.8%) or Sant Cucut del Valles (6.4%).
