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Nuria Triguero
Malaga
Tuesday, 30 July 2024, 09:55
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In the province of Malaga there are eight municipalities where the price increase for new housing in the last year is above 6%. Among them is Malaga city itself, which leads the pack of the larger cities in Andalucía with an increase of 6.5%. Sitting above this percentage, however, is Benalmádena, which is the town with the highest increase in price per square metre for a new build in Andalucía: 7%. This is the startling revelation in the latest property prices report by the independent appraisal company, Sociedad de Tasación.
Among the Andalusian provincial capitals Malaga leads the increase in the price of new housing over the last year (6.5%) ahead of Seville (4.1%), Granada (3.9%), Cadiz (3.6%), Cordoba (2.6%), Almeria (2.4%), Jaén (2.1%) and Huelva (1.7%). It is the only one, in fact, to record a higher growth rate than the overall Spanish average (4.3%).
Therefore, Malaga closes June 2024 with an average new home price of 2,337 euros per square metre, reaching its highest value ever in the records collated by Sociedad de Tasación. It is followed by Seville (2,254 euros per square metre) and Cadiz (2,216), both above the 2,000 euro barrier, then Granada (1,959), Cordoba (1,865), Almeria (1,675), Huelva (1,455), and Jaén (1,426).
In addition, seven other municipalities in the province of Malaga recorded year-on-year increases of over 6%, with Benalmádena (7%) also reaching an all-time high of 2,187 euros per square metre. This is, in fact, the municipality in Andalucía where the average price of new housing has increased the most. Also noteworthy is the increase of over 6% year-on-year in seven other Costa del Sol towns in the province: Marbella (6.9%) to 2,374 euros per square metre, Estepona (6.5%) to 1.859, Torremolinos (6.5%) to 2,135, Fuengirola (6.4%) to 2,035, Vélez-Málaga (6.3%) to 1,712, Rincón de la Victoria (6.1%) to 1,823 and Torrox (6%) to 1,860.
The leading representative for Sociedad de Tasación in Malaga, Manuel Cerbán, explains the reasons for the price hikes: "The price of new housing in Andalucía maintains an upward trend similar to that recorded in Spain as a whole, with Malaga capital and some tourist municipalities in the same province leading the increases in year-on-year terms... The new-build market in Andalucía has limited stock that is concentrated above all in the provincial capitals and in the municipalities with the greatest tourist appeal. This scarce supply of housing, together with sustained demand and construction costs that continue to rise, is helping the unit value of new construction to continue to grow."
According to the Sociedad de Tasación report, Andalucía closed the month of June 2024 with an average new-build price of 2,055 euros per square metre, following an annual variation of 4.2%. This is a slightly lower increase than that recorded for Spain as a whole (4.3%), whose average price reached 2,930 euros per square metre. In turn, the half-yearly variation was 2%, also slightly lower than the 2.1% for Spain as a whole. The average value of new housing in Andalucía has therefore consolidated its position above the 2,000 euro per square metre barrier. In fact, it had reached this figure in December 2023. Nevertheless, it is still far from its record-breaking maximum of 2,270 euros per square metre in December 2007.
The Study of New Housing in Andalucía report also includes a review of how the property market has been doing during the second quarter of 2024 based on a series of Sociedad de Tasación's own indicators. One of these is the Real Estate Confidence index, which has increased in Andalucía by 2.7 points over the last three months and by 4.4 points over the last year, reaching 52.3 points out of 100 in the second quarter of 2024. Andalucía is thus back above the break-even point (50 points) for the first time since December 2022, a trend that is also reflected in Spain as a whole, now once again above the break-even point (52).
The improvement in this index confirms the recovery of feelings of optimism in the region's real estate sector, thus breaking the negative trend of the last year and a half, a period in which the European Central Bank (ECB) has implemented a restrictive monetary policy as a tool to combat the strong inflationary pressures in Europe. In fact, the recent de-escalation of interest rates initiated in June by the ECB should act as a stimulus to gradually reactivate demand, both in terms of sales and also the granting of mortgages for house purchases.
The survey on which the Real Estate Confidence index is based was carried out between 7 and 20 June 2024. It gathers the opinions of more than 544 real estate valuers on several economic factors related to their business that boil down to, firstly, the market outlook (situation of the last three months) and, secondly, their expectations (forecasts for the next three months).
The report also covers the Real Estate Effort index, which measures the number of years of full salary that an average citizen would need to spend to buy an average home. This remains at 7.3 years for Andalucía, the same figure as the previous quarter and two tenths of a percentage point lower than a year ago (7.5). Andalucía maintains a Real Estate Effort index below the average for Spain (7.6 years in June 2024).
In turn, the Affordability index, as defined by Sociedad de Tasación, is an indicator that determines the balance between the average price of housing and the appropriate debt capacity for someone to be capable of buying such a house. This takes into account the average income of employed citizens. This index has increased slightly to 83 points in Andalucía in the second quarter of 2024. This is three points more than in the previous quarter and one more than a year ago.
The positive trend in this indicator is influenced above all by the news of the interest rate cut recently announced by the ECB, as well as by an improvement in the average rate offered by banks for new home purchases. This has led to a slight reduction in the cost of financing during the second quarter of 2024, which has allowed a segment of demand - for the time being contained - that had been left out of the mortgage market last year, to now have access to home purchases in this new scenario.
Andalucía is one of the ten Spanish regions whose index does not reach 100 points (or break-even point). This means that an average person in a region like Andalucía with an average salary would still not be able to afford an average home without getting into a more than reasonable amount of debt.
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