2018 annual Spanish housing report

HOUSING PRICES ON THE UP, BUT STILL A FAR CRY FROM PRE-CRISIS LEVELS In 2017, housing prices consistently grew across the whole of Spain, especially in the more fast-paced markets. According to the Housing Price Index (Índice de Precios de Vivienda – IPV) prepared by INE, prices climbed 6.7% in Spain during Q3 2017. Whilst all autonomous regions registered price increases, sharper spikes of over 9% were seen in Madrid, Catalonia, and the Balearic Islands. 

However, housing prices are still a far cry from the levels seen during the last expansive cycle. The growth recorded during the 2004-2008 period (averaging 9.8% y-o-y) remains greater than the growth recorded in recent years (averaging 6.3% y-o-y between 2015 and Q3 2017). Price increases are caused by the market adjusting to current demand. This is why, for the time being, we cannot confirm whether or not this growth is due to speculative factors or whether another property bubble is brewing.

We anticipate that housing prices will continue to climb in 2018, with y-o-y growth reaching circa 5-6%. That said, prices could rise by much more in the more active markets (Madrid, Barcelona and the Balearic  Islands).


New-build housing development is starting to pick up slightly, although the number of homes completed remains low (an annual average of 48,000 units up to Q3 2017). This figure is not only way below levels seen in 2000-2007, when the annual average was 482,000, but is also even behind the 267,000 completed each year during the economic cycle before that (between 1991-1999). However, the increase in the number of housing permits approved in 2017 (which grew 19% y-o-y to Q3) indicates that new-build housing supply will begin to edge up towards the end of 2018.

Madrid headed up development activity, accounting for around 8% of all permits granted for new-builds in  2017. Housing production figures are definitely improving, but they are still well off pre-crisis levels. The new housing production cycle will be greatly influenced by the heightened activity of the market’s new players.  Companies such as Neinor Homes, Aedas and Metrovacesa own significant land banks, which gives them the upper hand over the other market players. Over the next few months, their ability to meet new-build demand could make them the leaders of the markets in which they operate. In 2018, we expect average housing prices to increase by around 5-6% y-o-y, especially in areas with greater demand, with Madrid and Barcelona leading from the front.