Europe | Spain
Spain
Continued interest in high-end
properties in prime locations
should maintain price stability
at the top of the market
Diminishing household sizes, the growing number
of households with a rising population and the growth
in immigration, are all actively contributing to the
demand for housing across Spain. The relaxed mortgage
market has supported rising levels of home ownership
and an increase in new residential developments.
These trends have encouraged a significant
development boom in Spain. Between 2000 and 2007,
the population grew by 11 per cent from 40.7 million
to 45.6 million. In the same period GDP/capita has
more than doubled from €9,200 to over €20,200. And
at the same time international tourism has grown by
five per cent per annum in the past decade, which has
further contributed to the recent growth of the second
home market.
Slower rate of growth
Price growth in important second home locations
including the Balearic and Canary Islands was strongest
in the late 1990s to 2000. By comparison, Cataluña,
Valencia and Andalucía, which includes both Malaga
and Marbella, saw price growth peak more recently.
For example, price growth in Andalucía was at its
highest in 2004 at 21 per cent.
However, rising interest rates over the past year have
undeniably weakened buyer activity as affordability has
reduced, leading to a dramatic reduction in transaction
levels. Higher supply but lower take-up volumes have
reduced property price growth. Official statistics show
that prices are still growing on average, albeit at a
slower rate. However, other sources show a five per cent
decrease in real prices in Spain between autumn 2007
and autumn 2008.
Tighter regulations
Property developers are affected not only by these
factors, but also by tightened planning and development Both nationals and to be aligned if there is to be any sustainable growth in
regulation. Further still, increased construction costs
international tourists
the sector in the future.
are contributing to the
and high land values have had a massive impact on
demand for property
Moving forward, many second home locations with
developers’ profit margins. in Spain. lots of new builds will continue to experience negative
In the domestic market, socio-demographic price growth in 2009. However, continued interest in
factors indicate that there is longer-term demand for high-end properties in prime locations with good access
mainstream housing in Spain, most particularly in the and amenities, notably parts of Mallorca and Ibiza in
principal cities, such as Barcelona, Seville and Madrid. the Balearics, as well as prime locations in Marbella and
Imbalances in affordability, however, and high levels of integrated resorts such as Sotogrande, should maintain
new supply in the residential property market will need price stability at the top of the market. n
14 savills global residential review
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