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In 2018, Spanish property prices grew by 7.8%, compared with a 5.1% growth rate the year before, according to real estate portal Fotocasa.

The property market recovery is still somewhat sporadic across the country – Madrid experienced house price increases of 19.5%, while prices in regions such as Murcia dropped by 3.3%. However, experts are forecasting a slowdown in market activity in regions that were quick to join the recovery, which should spark some upward movements in less thriving areas.

The property recovery – driven by economic growth, easing of lending terms and an initial lag in new housing – led to the biggest rise in house prices for 12 years in 2018.  And although Spanish property prices are still down around 40% from peak values reached in April 2007, the market is still attracting investors and foreigners alike.

“The awakening of the latent demand, the appetite from investors and the profitability from rentals in a low interest rates environment explain this return of interest in housing, and that’s had a direct impact on prices,” noted the head of research at Fotocasa, Beatriz Toribio.

Investors will notably be drawn to the buy-to-let market which saw rental prices rising by 1.8% last year to €8.30 per square metre, reports Fotocasa. Following seven years of declines, this is the fourth consecutive year of rises after a 3.6% increase in 2015, 6.7% in 2016 and 8.9% in 2017. However, the latest rise is visibly less significant that the last three years, which could possibly mean the market is starting to stabilize.

“The average price of rents has not stopped rising since 2015, but for the first time in the last four years the index reflects that this increase has been moderate during 2018 in a good part of the country”, says Toribio.

“Everything points to a trend towards stabilizing the price of rents that, on average, are 18% below the maximum of 2007. But in some areas, especially large cities and tourist resorts, prices continue to rise and will follow doing in 2019, despite the fact that in many cases they are already at levels higher than the records of the boom years”, she explains.

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