Spanish Island and Coast House Prices Return to 2008 Levels

Discover how house prices on Spanish islands and coast have surged, nearing 2008 highs with an average 3.3% rise in May.

House prices in Spain experienced a notable increase in May, rising by 3.3% compared to the previous year. This upward trend was further highlighted by a 0.5% increase from April. The impact of this growth was particularly felt in the island areas, where house prices surged by 8% year-on-year, coming within 0.1% of the peak reached during the housing bubble in March 2008, as reported by Tinsa data.

While the "Mediterranean coast" and "Islands" saw a slight slowdown compared to April, they still registered significant monthly increases of 0.7% and 0.5%, respectively. On the other hand, "Large cities and province capitals" experienced a modest 0.4% increase, while inland towns saw a more substantial rise of 1%, offsetting the slight declines seen since December. Metropolitan areas remained stable with a 0.1% monthly increase.

In terms of year-on-year changes, areas with high tourism demand, such as islands and the coast, saw price increases of 8% and 6.5%, respectively. However, these growth rates were slightly lower compared to the previous month. "Province capitals and large cities" had a year-on-year rate of change below the average at 2.2%, while "Metropolitan areas and other towns" were in line with the average at 3.2%.

The rise in house prices can be attributed to the positive trend in employment during the early months of the year and a strong demand that has continued to support property transactions. This, coupled with a shortage of supply in employment hubs and tourist areas, has contributed to the sustained increase in prices.

Despite the recent growth, the average value of new and used housing in Spain remains 17.8% below the peak of the 2007-2008 real estate bubble. The island territories are closest to reaching the previous highs, trailing by just 0.1% from the March 2008 reference. "Province capitals and large cities" follow as the second group closest to the boom reference, albeit still 14.1% below.

Overall, the General Index has surged by 39.7% since the post-financial crisis low in August 2015, with the "Islands" leading the way with a 47.1% increase in housing value. This is ahead of the 46.8% increase seen in "Province capitals and large cities" and significantly higher than the 24.1% rise in smaller inland towns.

The housing market in Spain continues to show resilience and growth, driven by strong demand and limited supply in key areas. While prices have not yet reached pre-crisis levels, the steady increase indicates a positive trajectory for the real estate sector in the country.