Housing crisis
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Cristina Vallejo
Malaga
Friday, 20 September 2024, 19:23
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Housing in Malaga has now broken all records as confirmed by the official data published on Thursday this week. The price per square metre of housing in the province has already reached a fraction over 2,400 euros, which is just over 2% higher than the figure reached just before the housing bubble last burst in 2008, when it reached 2,348 euros, according to data from Spain's ministry of housing. However, the picture could be worse because Julio Rodríguez, statistics expert and former president of Banco Hipotecario and Caja de Granada, said that the ministry's study takes rateable values rather than how the prices truly move in the harsh reality of the property market.
The property market in the province of Malaga has been turning over much faster than in the country as a whole. The price per square metre for Spain stood at 1,895.60 euros at the end of the second quarter of the year, nearly 10% below the 2,101.40 euros when it peaked in the first quarter of 2008. That was just before the global financial collapse that triggered the bankruptcy of Lehman Brothers 16 years ago on 15 September. Meanwhile, in Andalucía the current average price - as in second quarter of 2024 - stood at 1,588.70 euros per square metre, nearly 12% below the 2008 highs of 1,800 euros.
Turning to the Balearic Islands, one of the areas that has been one of the main players in the overheating of the property market in recent years, the current price levels per square metre of over 3,100 euros are 28% above the highs prior to the 2008 financial crisis. In Madrid records have also been broken: the current price of almost 3,200 euros is higher than the 3,007 euros of 12 years ago. Only in these locations and Santa Cruz de Tenerife have the maximum levels of 2008 been surpassed. So Malaga forms part of this small band of provinces where housing is already more expensive than in the times of the last real estate bubble.
Rodríguez explained that the areas experiencing the highest price rises are those where tourism is most important and also those that have seen the greatest population growth. As to whether history could repeat itself and a new crisis occurs following the bursting of a new bubble, he states that this time round there is not as much bank financing propping up that bubble as there was 12 years ago, which reduces the risk as it is investment funds, not banks, that are now more active in urban development. In any case, he advises caution because of the "myopia of disaster": "The further we move away from crises over time, the more likely they are to happen again."
66% is how high housing prices in Malaga have risen from the lows
If it reached a high of around 2,350 euros per square metre in 2008, it had fallen to 1,450 euros by 2013. Since then, it has been on its way back to record highs.
That crisis back in 2008 dried up financing channels and triggered mass unemployment. It also caused a sharp fall in housing prices due to the disappearance of buyers and the excess of unsold properties already built. In Malaga the price drop went from highs of around 2,350 euros in 2008 to a low of 1,447.20 euros in the fourth quarter of 2013. Now, from that low point, housing in the province has risen in price by around 66% in barely a decade. This is a recovery from those lows that is only beaten by the Balearic Islands, where the swing exceeds 70%. As for Madrid, the rise from the lowest point marked by that crisis is around 60%.
The price of housing in Spain as a whole, following the lows from the crisis that bottomed out in the third quarter of 2014 at 1,455 euros per square metre, has recovered by just over 30%. Putting it bluntly, the real estate market in Malaga has become twice as expensive as the rest of Spain in the last ten years.
Moreover, there is no sign of a slowdown in the province. Malaga is the province where house prices have risen the most in the last twelve months. According to the ministry's calculations, the rateable value per square metre of freehold housing in Malaga is up by 9.8%, rising from 2,187 euros in the second quarter of 2023 to over 2,400 euros in June 2024. Teruel follows Malaga with a rise of 9.1%, while in Santa Cruz de Tenerife and Valencia the increase is close to 9%.
The increase in housing prices in Malaga over the last year is higher than that recorded for Andalucía as a whole, which is 7.5%. The second Andalusian province where prices have risen most is Cadiz, increasing by 7.4%. Jaen is the province in the region where property prices have been most contained, with a rise of just 1.2% in the last 12 months.
The average increase across Spain for the last year is 5.7%, which means that prices in Malaga are growing at a rate that is double the national average. The contrast is even more visible when comparing the first and second quarters of 2024 as Malaga is at 3.1% while the national average is only up by 1.6%.
Obviously there are provinces with price drops: Ourense (-1.8% in the last year), as well as León (-0.6%) and Cuenca (-0.3%).
Malaga is the sixth most expensive province in Spain to buy a property. The most expensive is Madrid, with 3,198 euros per square metre, followed by the Balearic Islands at 3,108 euros, Guipúzcoa (2,993.3 euros), Barcelona (2,668.20 euros) and Vizcaya (2,546 euros). The cheapest is Ciudad Real (724.20 euros per square metre), followed by Cuenca (771.10 euros) and Jaen (813.70 euros).
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