ARCHIVED - Property values rise in most of Spain with the exception of inner-city properties, say Tinsa

Changing preferences as a result of the pandemic may be boosting values outside major cities

The latest monthly data published by leading Spanish property valuation firm Tinsa show that average market values of homes in this country were 0.7 per cent higher in February 2021 than in the same month last year, although in the category of “capitals and large cities” a 1.4 per cent drop is reported.

It is reasonable to suggest that this slight depreciation in the value of homes in major cities is a consequence of the coronavirus pandemic for two reasons: on the one hand, it could well be a reflection of the changes in preferences caused by the long periods of lockdown and confinement during the coronavirus pandemic, as the availability of private gardens and terraces becomes a priority for many buyers after the long periods of lockdown and confinement over the last year, while on the other hand it is also a fact that for many people the pandemic has resulted in a lowering of their purchasing power, and more affordable properties are generally easier to find outside the major cities of Spain.

In other categories, year-on-year increases are reported in “metropolitan areas” (+1.3 per cent), on the Mediterranean coast (+2.3 per cent), in the Balearic and Canary Islands (+3.7 per cent) and in the catch-all category of “other municipalities” (+2.2 per cent).

The latest bulletin also contains the monthly “market snapshot”, in which Tinsa highlight reasons to expect upward or downward movements in the value of homes in Spain, summarizing the following indicators among others and clearly illustrating how almost all of them have been distorted by the pandemic:

- Sales figures: the latest monthly data (for December) show a 3.9 per cent year-on-year increase and but an accumulated fall during 2020 of 17.7 per cent.

- Building licences: the latest monthly data (also for December) show a 12.5 per cent year-on-year decrease and a 19.5 per cent decrease over the course of the year.

- Mortgages approved: despite the increase in sales, the latest monthly data for December) show a 14.8 per cent fall and a decrease of 7.6 per cent in comparison with 2019.

- Unemployment: the latest monthly data (for February) show a 23.5 per cent increase during the last 12 months.

- Euribor: the interest rate on which most mortgage repayments in Spain are calculated was -0.501% during February, close to its record low.

The low interest rates currently available on mortgage loans ought, in normal circumstances, to be associated with healthy sales figures and upward pressure on market values caused by widespread demand. But the current circumstances are by no means normal, and the surge in unemployment since the pandemic was first detected in Spain a year ago has led to far fewer people being prepared to buy a home.

Despite this, though, there are indications that the property market is still fundamentally in good health and the sales figures for December illustrate this. On the other hand, whether that level of activity can be maintained will be impossible to say until Spain is able to enjoy a long period of “normality”.