Comparison of average transaction prices – Spain still attractively priced!
The study compares the average transaction price of new properties for selected countries for 2023. Given the high quality of life, we feel that the price per square meter in Spain remains undervalued. The results show that despite the rise in interest rates and the gentle decline in housing availability, Spain’s real estate market remains attractive to investors.
Spain, although not among the cheapest countries in the list, offers prices significantly lower than in Western European countries such as Germany, France and the UK. At the same time, the Spanish real estate market is characterized by stability and growing interest from international investors.
Summary of average transaction prices for new homes in selected European countries in 2023 (EUR/m²):
– Highest prices:
- Israel: 5439
- Austria: 4920
- Germany: 4700
- France: 4538
- Netherlands: 4266
– Average prices:
- Spain: 2745
- Hungary: 2605
- Slovenia: 2610
- Poland: 2219
- Croatia: 2246
- Italy: 2118
– Lowest prices:
- Bosnia and Herzegovina: 1315
- Greece: 1463
- Romania: 1504
Trends:
– Price increases: Hungary (13.3%), Poland (12.2%), Portugal (11.5%).
– Price decreases: Italy (10.7%), Israel (4.6%), Denmark (3.8%).
Note: Prices shown are averages and may vary by region, property type and other factors.
Mortgages – a summary of average interest rates
Spain stands out among other European countries for its low average interest rates for mortgages.
An analysis of the data presented shows that Spain has one of the lowest average interest rates for mortgages in Europe. This makes buying property in the country potentially more affordable for many potential buyers.
Average interest rates for mortgages:
– Highest (above 6.8%): Poland (8.1%), Romania (7.7%), Hungary (7.4%), Serbia (6.8%)
– High (4.5% – 6.7%): Czech Republic (5.9%), Denmark (5.2%), Bosnia and Herzegovina (4.9%), Norway (4.8%), Italy (4.7%), United Kingdom (4.7%)
– Medium (3.3% – 4.4%): Croatia, Belgium, Slovenia, Portugal, France, Israel, Slovakia, Austria (3.9%).
– Lowest (below 3.3%): Bulgaria (2.6%), Spain (3.1%)
A quote from a report on the Spanish market:
“The current real estate market in Spain presents a positive outlook, driven by a robust macroeconomic environment. The Spanish economy is projected to grow at an average annual rate of 1.8% from 2023 to 2026, with unemployment rates reaching their lowest levels since the Great Financial Crisis. Spain is expected to outperform the top five European economies. Despite rising ECB interest rates aimed at controllni g inflation, household solvency remains stable, with indebtedness at 54% of GDP in 2022, significantly lower than the 81% recorded in 2007.
Population and household growth are set to drive long-term demand, with Spain anticipating an increase of 5.4 million inhabitants from 2020 to 2050 and an annual growth of 182,000 households from 2022 to 2037. This demand is particularly strong in larger metropolitan areas due to job opportunities and favourable Mediterranean climate. While homeownership remains high at 76% compared to the EU average of 70%, there is a gradual shift towards rental markets, presenting new opportunities for the Build to Rent sector.
Despite positive demand prospects, the housing supply is constrained. Spain‘s new-build housing supply is at its lowest level since the 1970s, with only 2.3 building permits per 1,000 inhabitants compared to over 3.0 in key European countries. This shortage, coupled with strong demand, has led to rising prices for new-build homes. Although prices remain 27% below 2007 levels in real terms, the gap between new and secondhand housing prices is widening.
Homebuilders face several challenges, including scarcity of ready-to-build land, low construction capacity, rising construction costs, and stringent financing conditions. Land prices have surged due to limited land transformation in the past 15 years. Furthermore, increased construction costs have significantly driven up housing prices, although no further substantial increases above inflation are expected. Financing conditions have tightened, but remain relatively attractive, particularly for the midhigh market segment with higher purchasing power.
Investments in strategic land and alternative living sectors such as Build to Rent, affordable housing, and senior living are becoming crucia lto meet future demand and address current supply imbalances. Understanding the complex town planning regulations and forming partnerships with experts are essential for navigating the sector‘s challenges and capitalizing on growth opportunities.”
Why invest in Spain?
In summary, while the Spanish real estate market faces several challenges, the long-term outlook remains positive due to strong macroeconomic fundamentals and favorable demand drivers.
Spain is currently one of the most attractive real estate markets in Europe. The Deloitte report confirms this trend, pointing to the country’s solid economic fundamentals (according to Deloitte specialists, it will grow at around 1.8% between 2023 and 2026). Stable economic growth, improving labor market situation (according to forecasts, the unemployment rate will reach the lowest level since the financial crisis of the early 2000s) and favorable demographic forecasts create excellent conditions for real estate investments. According to experts, demand for housing will grow, which will translate into further price increases.
