Prices in Spain Surge While New Home Prices Lead the Charge in 16-Year High

The crescendo is led by a dazzling 16-year pinnacle in new home prices, soaring 11%, driven by a fusion of fervent demand from foreign buyers, scintillating inflation, and a tantalizingly low supply

In a surge that defies historical trends, Spanish property prices witnessed a remarkable 4.5% year-on-year increase in the third quarter, marking a robust uptick propelled by the sharpest surge in new home prices in 16 years. 

Data released by Spain’s National Statistics Institute (INE) on Tuesday unveiled a striking 11% surge in new home prices compared to the same period the previous year. This surge has been attributed to a perfect storm of factors, including limited supply, heightened demand from international buyers, and escalating costs fueled by inflationary pressures.

The resurgence of the prices, particularly in the realm of new home prices, is primarily attributed to the persistently low levels of new housing production, clocking in at less than 100,000 new homes per year, as noted by Javier Diaz Izquierdo, a real estate analyst at Madrid-based broker Renta 4. 

Spain, having approved a staggering 850,000 new licenses for home construction in 2006, experienced a catastrophic property market collapse that subsequently triggered a severe financial crisis.

Diaz Izquierdo underscores that the surge in new home prices is also influenced by the distinct profile of new home buyers who tend to carry lower debt burdens and exhibit reduced sensitivity to interest rates and price escalations. Additionally, the influx of foreign buyers, particularly in sought-after holiday destinations, is contributing to the upward trajectory of property prices.


Bank of Spain Governor Pablo Hernandez de Cos, while acknowledging the need for vigilant monitoring of property prices, expressed that the risk of over-valuation had somewhat diminished. 

However, online property portal Fotocasa emphasized the sustained interest in home buying, surpassing pre-pandemic levels, and highlighted the dwindling supply over the past year, posing challenges in swiftly achieving a market balance.

“We predict that by the end of the year the price increase will be close to 5%,” anticipates Maria Matos, a spokesperson for Fotocasa, underscoring the enduring momentum in Spain’s property market that continues to defy conventional expectations.

This article is brought to you by Expat Hub Valencia, a property buying agent  in Valencia. Using the Expat Hub’s services, you will be able to successfully navigate Valencia’s complicated property market in no time.

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