Metropolitan Areas Continue To Lead The Rise In House Prices
New and used housing is 8.5% more expensive than a year ago, according to the Tinsa IMIE General and Large Markets statistics. Metropolitan areas continue to lead year-on-year increases . In these areas the price of housing has increased by 9.5% in August compared to the previous year, as indicated by the appraiser’s data. It is closely followed by the smaller towns in the interior and on the Atlantic coast, grouped into the rest of the municipalities, where housing has increased in price by 9.2% in the last year.
Below the national average, the average value in capitals and large cities is 7.6% higher than a year ago , followed by the annual increase on the Mediterranean coast, where house prices have grown by 6.8% . Growth is more contained on the islands, where the market remained active after the first impact of the pandemic, and shows an average value 3.5% higher than a year ago.
Cristina Arias, director of the Tinsa Studies Service, points out that for the second half of the year “the reduction in the purchasing power of households derived from rising inflation above wage growth, the drop in the confidence index of the consumer in view of the prospects of lower economic growth and the increase in interest rates that makes mortgages more expensive can act as decelerating elements in the growth of the demand for residential products “. In contrast, the expert points out that ” the increase in rental prices derived from the transfer of demand from sale to rental can encourage investment demand.”
The slowdown in demand growth combined with a limited supply exerts, according to Arias, opposing forces on residential prices. “Overall, a gradual slowdown in price growth is expected as households see their purchasing power erode,” she says.
The residential price repeats the break of previous years in the monthly variation and shows in August a brake in the growth trend of prices experienced in previous months, with a decrease of 0.8% compared to July. “This negative monthly variation in August, led by the capitals and large cities and the islands, is recurrent in the price series and therefore has a seasonal component associated with the drop in activity during the holiday period,” explains Arias.
Among the groups analyzed, the largest fall in prices within a scenario of moderate correction was in the capitals and large cities, with a decrease of 0.9% between July and August, followed by the island territories (-0.5% monthly ), where the evolution of prices had been moderating for several months. Only the smallest towns in the interior of the peninsula and on the Atlantic coast slightly increased their average value in August in the monthly rate, by 0.1%.