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Malaga was the second most expensive province in Spain in terms of house prices in 2024 with an increase of 13%, according to the property valuation company Tinsa by Accumin. This compares starkly with the 4.4% average price rise in bricks-and-mortar across all Spain. The only province that surpassed Malaga in the rising cost of buying an apartment was Soria, where the increase was 15.3%. According to figures from another real estate valuation company, Gesvalt, the increase in house prices in Malaga was even higher - 5.6% - last year. Now with 2025 under way, the big question is what will happen to the value of flats, taking into account how much their prices have soared in recent years and the social discontent due to the difficulties of so many in getting on the property ladder.
SUR has consulted five experts for their market forecasts. The prevailing view of all is that prices will continue to rise due to the pressure exerted by unabated demand and scarce supply. What the analysts differ on is the size of the increase to be expected in property prices this year, as some do see a moderation in the rate of increase or factors that could lead to some slow-off.
Patricio Palomar, director of alternative investments at AIRE Partners, believes that 2025 in Malaga city will see a consolidation of the price rises of recent years with an increase that will stick closer to the rate of inflation, meaning that it will be in the region of 3%. More specifically, he expects price increases of between 3% and 5% for housing in areas of the provincial capital such as Ciudad Jardín, Martiricos and Cruz del Humilladero. He also suggests that the increases along the Carretera de Cádiz area could be somewhat more intense (between 5% and 6%), while in eastern areas such as Cerrado del Calderón or El Limonar the rise could exceed 6%, as well as in the newer western areas, such as Teatinos or Zeta district.
As far as the wider province is concerned, Patricio Palomar foresees that the increases may be more intense in the surrounding areas of Malaga city due to the displacement of the population from an increasingly unaffordable city centre with limited supply heading west towards Torremolinos, Benalmádena and Mijas or to the east in Rincón de la Victoria. He also predicts more urban developments in Cártama, which he anticipates will become a very important dormitory town.
Regarding the more tourism-centred, holiday areas of the province, he suggests there will be a stabilisation of property valuations for Marbella. Moving west along the Costa del Sol he sees better times for Manilva and some areas of Estepona, where price rises may exceed 7%.
"The responsibility for the price rises in Malaga lies in the mismatch between supply and demand. People come to Malaga from all over Spain. But, in addition, construction prices have risen a lot in the province because there is more development activity than in other areas of Spain and there is a shortage of workers. This is so much the case that sometimes sales of developments are stopped until we know how much they are going to cost to build. Developers are being very cautious about this," explained Carlos Smerdou, CEO of Foro Consultores.
Both these factors - rising construction costs and strong demand for housing that will be helped further by falling interest rates - will continue to contribute to price rises in both Malaga city and the wider province. This will be especially so in areas where population displacement is already happening, because price levels in many parts of Malaga city are also already out of reach for growing sections of the population.
As it is Smerdou says he would not be surprised to see price increases this year of 10% or even higher, despite having seen very strong increases in recent years, which often suggest a slowdown is more likely. "A 10% increase on prices of 400,000 euros means an increase of 40,000 euros; we are no longer talking about 20,000 euros on 200,000 euros. This means that a lot of people are being left out of the market," he said. Still, in spite of everything, people will continue to buy homes. Smerdou suggests two contributory factors: firstly, that more than half of the homes are bought in cash with no mortgage, secondly, the general lack of knowledge of the existence of savings alternatives, which ends up directing such monetary resources towards housing, "an asset that everyone understands."
"Investor demand is fuelled by people who want to rent out their assets, but also by those who are waiting for a revaluation of the asset in order to sell it before they have finished paying for it, to optimise profitability. There are also people looking for replacement homes: they buy at today's prices, under construction, and hope to sell their first home in a couple of years' time in the expectation that prices will rise, so the books will balance out very well for them," said Smerdou.
"The housing market is red hot", added Gonzalo Bernardos confidently, professor of Economics at the University of Barcelona and expert in the real estate market. He goes on to explain his reasoning for such a bold forecast: he predicts a price increase of 12% for current housing and 15% for new builds, with a pull in demand that will be led by the middle and lower-middle classes, and especially those under 40 years of age. He believes this will happen because he is sure that many young people will try to get out of the "rental trap" this year by buying a home with the help of their parents. "Young people are going to start buying homes on a massive scale," he says. The supply of new housing available will not be enough to absorb the demand, so buyers will turn to the second-hand market.
In his opinion the younger generation now has a better quality of employment and higher salaries: "They have more solvency, more stability, interest rates are lower and they only lack the previous savings, which will be provided by their parents." That said, he also noted that more and more financial institutions are giving 80% mortgages or higher against property values.
This will have a knock-on effect on the mortgage market. Bernardos forecasts that credit granted by banks will grow by 35% this year compared to last, while the number of mortgages taken out could rise by 25%.
Bernardos does not overlook the economic difficulties in France and Germany as very important markets for Malaga, both for its real estate market and its tourism. However, he believes that this will not have an impact on housing in the province and foreigners will continue to buy houses here. He is adamant that the lead role in this real estate 'boom' - as he calls it - is not tourist housing, so he repeats his viewpoint that it will be "young people who are going to get out of the rental trap."
José Antonio Pérez, professor of Real Estate Ecosystem at the Real Estate Business School (REBS) in Malaga city, stressed that the Malaga market lacks supply and that this runs alongside with a strong demand market from residents, workers, tourists and a luxury segment that must continue to be addressed so that it does not disappear. "In Malaga there is a special tension, so it is necessary to reactivate the supply of new housing, rehabilitation and the mobilisation of available land, especially public land, to build affordable housing," said Pérez.
According to forecasts from the real estate 'Pulsimeter' - a regular report set up by REBS and in which Professor Pérez participates along with collaboration from the University of Malaga - the number of new homes to be completed in 2025 in the province will be close to 8,000, which represents an increase of 10% compared to the figure of just under 7,300 estimated for 2024. However, the number of new property deals done will be close to 10,200, which implies an increase of 18.5% in the number of sales and purchases of new homes. Still, second-hand housing deals will fall by around 20%, which will mean that the total number of transactions will remain unchanged this year compared to the previous one at around 18,225.
Despite this disparate behaviour in the sale and purchase of newly-built and pre-owned homes, the REBS report anticipates price rises for both types of property. It predicts an 18.7% rise in new home prices, with the average value standing at 535,770 euros, compared to just over 450,000 euros a year earlier. With regard to pre-owned housing, it estimates an increase of 6.3%, closing at around 320,000 euros from around 300,000 euros estimated for 2024.
Meanwhile the average mortgage signed in Malaga will rise by 2.4% to over 228,000 euros.
At the same time, the latest REBS report calculates that the average loan in Spain will increase by 4.7% to around 150,500 euros. In the country as a whole, the rises in new and pre-owned housing will be similar, both types at around 3.5%. With this in mind the average price of new property in Spain will be just over 286,600 euros by the end of 2025, while the average value of a second-hand apartment in the country will be close to 185,000 euros.
Cristina Arias, director of the research department at Tinsa by Accumin, explains that 2024 has had new elements that have boosted residential demand, which has remained robust since 2021: the fall in interest rates - and the resulting drop in mortgage costs and easier access to credit - and the reduction in inflation. "This high level of activity is supported by the resilience of employment and the recovery in household purchasing power, factors that have contributed to maintaining the solvency of a demand that has increased due to immigration and purchases by non-residents. Lower interest rates are mobilising this solvent demand," she said.
This is for the year 2024. So, what of 2025? Arias believes that, in view of the new year, the European Central Bank will continue to lower interest rates. So it is this, in the context of resilient employment, high savings, normalisation of household purchasing power and restoration of consumer confidence, that will continue to stimulate both residential demand and investment to expand the housing stock. In short, sales will continue at robust levels.
However, she also noted possible factors that may favour moderation in the upward trend in demand and prices - one example is the already high level of sales and purchases and also the short-term shortage of housing supply in the areas with the highest concentration of demand, thereby limiting the creation of homes. Similarly, the residential prices in these areas, which are also under pressure due to the lack of supply and putting those homes beyond the reach of many.
To these factors Arias adds that the contribution of demand for tourist housing and foreign sales and purchases further accelerate the growth of residential prices to the point that the rate of theoretical purchase effort in Malaga province is one of the highest in the country (swallowing up 58% of the disposable income of the average household), although it shoots up to 74% specifically in Marbella. "These levels of effort reflect a high level of difficulty of access for the local population, which loses relevance compared to foreign buyers and tourists," she concluded.
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