Spain Real Estate: Q3 Sees 8.1% Price Increase  

In a noteworthy development within the Spanish real estate market, the price of free housing has experienced a significant increase of 8.1% in the third quarter of the year, while foreclosures have seen a modest decline of 1.1%. This surge in housing prices represents the steepest increase since the first quarter of 2022, when prices rose by 8.5%, as reported by the Housing Price Index (IPV) released by the National Institute of Statistics (INE) on Thursday.

The primary driver behind this price escalation appears to be the second-hand housing sector, which recorded a year-on-year price increase of 7.9%. This figure is six-tenths higher than the rate observed in the second quarter and matches the growth rate seen in the second quarter of 2022. Notably, the price of second-hand housing has been on a consistent upward trajectory since the second quarter of 2014, indicating a sustained demand in this segment of the market.

In contrast, new housing prices have also shown a robust performance, growing by 9.8% year-on-year in the third quarter, although this rate is 1.4 percentage points lower than that of the previous quarter. With this latest advancement, the price of free housing has now accumulated an impressive 42 consecutive quarters of increases, underscoring the resilience of the housing market.

A regional analysis reveals that all autonomous communities in Spain reported year-on-year increases in housing prices during the third quarter. The most significant increases were observed in Navarra (+10.7%), Andalusia (+10.6%), Aragon (+10.3%), La Rioja (+9.2%), and Murcia, which recorded a 9% increase compared to the same period in 2023. Conversely, more moderate increases were noted in the Balearic Islands (+5.8%), Catalonia (+6.8%), and both Asturias and Castilla-La Mancha, each with a year-on-year increase of 6.9%.

When examining quarter-on-quarter changes, the price of free housing rose by 2.8%, a figure that is eight-tenths lower than the increase recorded in the second quarter. This upward trend marks the third consecutive quarter of quarterly increases. Between July and September, the price of second-hand housing also grew by 2.8%, although this rate was nine-tenths lower than that of the previous quarter. New housing prices mirrored this growth, extending the momentum established in the second quarter by a marginal one-tenth.

On the foreclosure front, the total number of registrations for certifications related to foreclosures or repossessions of primary residences decreased by 1.1% in the third quarter, marking a decade-long decline. According to the INE, there were 1,718 foreclosures of primary residences during this period, the lowest figure recorded for a third quarter since 2019. However, it is noteworthy that registrations for mortgage foreclosures initiated in property registries surged by 22.8% on an annual basis, reaching a total of 4,121. Foreclosures on homes owned by individuals fell by 1.5% between July and September, with those initiated on primary residences decreasing by 1.1%. Data from the INE indicates that a significant 55.3% of the foreclosures initiated in the third quarter corresponded to loans granted between 2004 and 2008, with 30% linked to mortgages established in 2006 and 2007, while 6.2% were loans from 2019.

Regionally, Catalonia (1,162), Andalusia (769), and the Valencian Community (638) reported the highest number of certifications for foreclosures, while Navarra (11), La Rioja (29), and the Balearic Islands (50) recorded the fewest. In terms of housing, Catalonia (588), Andalusia (548), and the Valencian Community (450) led in foreclosure numbers, with Navarra (11), La Rioja (19), and Cantabria (22) trailing behind.

The Spanish real estate market is navigating a complex landscape characterized by rising housing prices and declining foreclosure rates, prompting critical reflections on the implications for future housing policies and market stability.