Changes in property prices in municipalities of Madrid and Barcelona

Evolution of real estate prices in Madrid and Barcelona municipalities
Real estate market is awakening from the stagnation of Covid with rises in the most populated municipalities of Madrid and Barcelona. Alcobendas leads the rise in the Madrid region, with 5.4%, and Esplugues in Barcelona, with 9%.

Although no sector in Spain has escaped the coronavirus hand, housing has withstood the pandemic's blow comparatively better than others during 2020 and has been one of the first to get back on the road to recovery. This does not mean that Covid has not left its mark on the property market, where house prices are still recovering.
Torrespaña is a 231 m steel-and-concrete television tower located in Madrid
Torrespaña is a 231 m steel-and-concrete television tower located in Madrid
In the second quarter of this year, property prices of both new and used market, rose in 76% of the 25 most populated towns in the Community of Madrid and in 56% of those in the province of Barcelona compared to the first three months of the year, according to data from the Tinsa appraisal company. Overall, the price of flats rose by 2.5% in Madrid and 2.9% in Barcelona in year-on-year terms, in the heat of economic recovery, and the resurgence of mortgages.

Progressive recovery

However, in a crisis that has been asymmetrical in its impact, the recovery is also very uneven. In fact, despite the quarterly upturn, the average price in the main municipalities of both provinces has not yet reached pre-Covid levels: "The progressive reactivation of the residential sector is confirmed, although it still has some way to go to recover the ground lost during the pandemic," say the Tinsa experts. In other words, the patient is improving, but is not yet fully healed. Thus, while in the Madrid municipality of Alcobendas the price of apartments has risen by 5.4% in the second quarter compared to the previous one, in Tres Cantos and Arganda del Rey it has fallen by 1.9% and 1.2%.

These decreases, in addition to those in municipalities such as Pinto (-0.8%) and Torrejón de Ardoz (-0.6%), contrast with the increases registered in the majority of municipalities, with rises of 3.8% in San Fernando; 3.4% in Las Rozas and Getafe; 3.3% in Majadahonda, and 3% in Pozuelo de Alarcón. In Madrid city, the price of apartments remained flat in the second quarter, with a rise of 0.1% compared to January-March. However, prices in the capital have risen by 2.5% year-on-year, placing the average price per square metre at 3,088 euros, the highest by far in the region, followed by 2,889 euros in Majadahonda.
Changes in property prices in municipalities of Madrid
Changes in property prices in municipalities of Madrid
The quarter-on-quarter data show that, in the heat of the economic recovery and the advance of vaccination, prices are shaking off the stagnation of previous months. A reactivation of the real estate market is also being felt, and even strongly – the rise of number of mortgages requested to purchase a home, which in the Community of Madrid shot up by 31.1% in June in monthly rate and 46.1% in annual terms, according to data published by the INE. In Catalonia, mortgages grew by 36.4% in annual terms.

Despite the fact that prices are rising again, very few municipalities have yet recovered to pre-pandemic levels. Of the 25 largest municipalities in Madrid, only Tres Cantos, with a rise of 2.7%; Rivas-Vaciamadrid (+2.2%), Madrid capital (+1.8%) and Torrejón de Ardoz (+0.5%) have more expensive homes today than in the first quarter of 2020, that is, before the pandemic froze economic activity and reduced the demand for apartments. In the rest of the region, housing is still cheaper today than it was, with percentages ranging from -0.2% in Arganda del Rey to -9.9% in Getafe. If the comparison is made with the second quarter of 2020, at the height of the great reclusion, very few municipalities have spared the falls.
The fall in prices has not been the only side effect of the Covid and its restrictions. At the same time, it has provoked a growing transfer of demand from the centre of large cities to the periphery. Buyers now search for single-family homes or apartments with terraces and patios. It happens precisely in the peripheral municipalities where prices are now rising most strongly.

Barcelona speeds up

In the province of Barcelona, prices also sped up in the second quarter, with an improvement that is already being felt in many of the towns around it. In fact, according to Tinsa statistics, nine of the most populated towns around Barcelona have already exceeded pre-Covid levels. Thus, in Barcelona capital, Manresa, Vilafranca del Penedès, Vilanova i la Geltrú, Sant Cugat del Vallés, Granollers, Mollet del Vallés, Sant Feliu de Llobregat and Gavà buying a flat today, whether new or used, is more expensive than in the first quarter of 2020.

In contrast, in municipalities such as Vic, Santa Coloma de Gramanet and Cerdanyola del Vallès, prices are still clearly below the levels prior to the Covid times, with falls of more than 6%. The ranking for the increase in the price of apartments in the second quarter is headed by Esplugues de Llobregat, where prices have increased by 9% compared to January-March, followed by Viladecans (+3.3%) and Badalona (+2.9%).
The​ highest viewpoint in Park Guell​ ( Parc Güell), Barcelona
The highest viewpoint in Park Guell ( Parc Güell), Barcelona
In Barcelona city, prices have risen by only 0.5%, partly as a result of the exodus of many citizens to neighbouring municipalities in search of larger properties with gardens or terraces. In fact, the highest price per square metre is not in Barcelona (3,359 euros), but in Sant Cugat del Vallés, where it reaches 3,432 euros. These are the only two municipalities analysed in which the bar of 3,000 euros is exceeded. The cheapest square metre is in Manresa – 1,080 euros. In Madrid, the most affordable area is in Aranjuez: 1,262 euros.

On the other side of the scale, many municipalities in Barcelona are still struggling, with quarterly price falls ranging from -0.9% in Sabadell to -7.4% in Manresa, as well as -3.7% in Vilafranca del Penedès and Mollet del Vallès. Although the trend has reversed this year and the market has become more dynamic. The comparison with the second quarter of 2020 still shows a clearly negative balance, with the majority of municipalities still below the prices recorded then. In Granollers, for example, prices are still 12.4% lower, in contrast to the 10.5% rise in Vilanova i la Geltrú. In 19 of the 25 towns analysed, apartments are still cheaper than in the second quarter of 2020.

Where will the prices direct?

In this context, the million-dollar question is what prices will look like in the coming months. Forecasts for Spain as a whole point to a cycle of moderation and stability in the short and medium term as a result of a more flat demand. But Madrid and Barcelona continue to be cases apart in the national market. They are large cities with dynamic markets that respond quickly to the economic recovery and are the two main poles of attraction for foreign demand, with a large gap between them and the rest of Spain. This could help to maintain the momentum of prices. Madrid has an added point in its favour: its institutional stability and its friendly policy towards foreign investment, in contrast to the erratic policy of Barcelona's city council in this area.

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