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House prices in Spain down by 1.1% due to corona crisis

Posted by Annebeth on 7th July 2020
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The impact of the crisis, which has had consequences for months on the economy and employment, seems to spill over on the Spanish housing market. The value of apartments and homes for sale (new and used) fell by an average of 1.1% in June, according to the latest report published by Tinsa.

The appraisal firm compared current prices to the month of March 2020, when the state of emergency was declared by the government to show the impact of the crisis on price developments.

The Mediterranean coast (-3.8%) and islands (-2.4%) were hardest hit

The coastal areas (Mediterranean coast and islands) experienced the strongest price declines, up to 3.8% in the case of the Mediterranean coast and 2.4% in the Canary Islands and Balearic Islands. The main reason for this is the fact that demand for used properties fell due to the poor economic outlook.

In addition, in many cities along the coast, such as Benidorm or certain areas in the Canary Islands and the Balearic Islands, half of the buyers usually are foreigners. The restrictions on mobility between the different countries and the uncertainty about tourism at the moment have partly caused this market to come to a halt.

As a result, house owners who have to sell quickly because they need cash have had to drop their prices.

Prices continue to rise in large cities

The price decrease was 1.3% in metropolitan areas and 0.6% in smaller municipalities. In the big cities, the fall in house prices is barely noticeable: here prices rose by about 0.2%. The lack of supply that has caused high prices in the major cities for years, currently means that prices hardly drop, despite the crisis.

Remarkably, the price drops are only visible from the month of June and not already in April and May, despite the fact that the economy was suffering from the lockdown at the time. However, according to Tinsa, there were hardly any price adjustments during those two months.

Houses are still 1.5% more expensive than in 2019

However house prices in June 2020 compared to those in June 2019 show that the properties on average are still 1.5% more expensive. This is due to the price increases prior to the lockdown.

Even in the Canary Islands and the Balearic Islands, where price declines were most pronounced in June, house prices were 5.4% higher than in June 2019. In the major cities, the increase was still 2.4% and in the smaller municipalities 1.3%.

Only in the metropolitan areas (excluding the major cities themselves) and along the Mediterranean coast, house prices fell by 1.1 and 0.3%, respectively, compared to 2019.

Number of transactions drops by 53.1%

Although prices remained virtually unchanged in the housing market in May, the number of transactions did drop drastically. Compared to last year, 53.1% fewer home purchases took place: from 46,210 in 2019, the number fell to less than 21,000 in 2020. In April the decrease was 38.3% and in March it was 17.6%.

The declines are not only the result of the economic situation, but also of the lockdown itself, which prevented people from doing viewings, for example.

Canary Islands: 72.7% less sales

In the Canary Islands even 72.7% fewer homes were sold, followed by Castile-León with 72.3% and Murcia with 68%. Madrid was the region where the smallest decrease took place and there it was even 45%.

Source: Expansión

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