New data from Spanish housing portal Idealista shows that house prices in Spain have continued to rise in the first quarter of the year. In fact, the rise even accelerated in March, growing by 7.3 percent year-on-year to an average of €1,943/m2. According to Idealista, the March increase is the largest since they started recording the figures.
This growing appetite for buying property in Spain comes despite inflationary pressures limiting spending power and the rise in the Euribor and consequent effect on mortgage interest rates, something especially pronounced in Spain.
READ ALSO: What the Euribor rise means for property buyers and owners in Spain
Most expensive cities
So if house prices are rising, where in Spain are they rising the most? Well, in Spain's ten most popular (and populous) cities, prices were up across the board in March.
Perhaps unsurprisingly, Barcelona maintains its position as the most expensive city in Spain, with an average m2 price of €4,063, a 2.7 percent rise from 2022. Madrid is second with €3,935 m2, though it had a slightly higher rise than its rival city - prices are 5.2 percent more expensive than in March 2022.
Prices in March also rose year-on-year in Palma de Mallorca (11.3 percent), Valencia (11 percent), Seville (7.9 percent), Murcia (8.5 percent), and Malaga (7.8 percent).
Prices in Las Palmas de Gran Canaria grew in March (5.4 percent) as well as in Zaragoza (4.8 percent) and Bilbao (2.7 percent.)
Cash purchases
So with a cost of living crisis and rising interest rates making affordable mortgages harder to come by, what explains these rises and where is the demand coming from?
Interestingly, as house prices in Spain continue to rise, so does the number of purchases that are done without mortgages - that is to say, as potential first time buyers are put off by rising mortgage rates, more people are buying property in cash than they used to.
"Our data shows us that a very significant proportion of buyers already own another property, which means that the amount they need to finance is lower or even zero," says Francisco Iñarreta, a spokesman for Idealista.
This market trend is reflected in figures from Spain's College of Notaries. According to records, in January over half (53.4 percent) of property purchases were made without a mortgage. In fact, the rate has exceeded 50 percent every month since September 2022.
"In the end, what the data means is that those in the market are now more an investor than first time buyer," Josep Maria Raya, a property expert at Pompeu Fabra University, in Barcelona, told Spanish outlet 20minutos.
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