New buildings in Spain are in high demand, with a shortage of supply
In 2024, prices of new buildings in Spain increased. The limited supply, while demand remains high, is the key driver. Another notable trend is the growing gap between the cost of new and existing housing. The average price per square metre of new buildings in Spain is €2,528. This is 44% higher than in the secondary housing sector.
Since the 2008 crisis, prices of new housing have risen by 66%. While the market as a whole has not yet reached the 2007 peak, some regions have recorded faster growth. In particular:
– in the Balearic Islands, the cost of new-build homes rose by 19% over the year;
– in Malaga and Benidorm, the increase was 2%;
– prices in Marbella and Santa Cruz de Tenerife almost reached pre-crisis levels.
Buying property in Spain requires a significant investment. Households need to give an average of 49% of their income to buy a new home. According to international recommendations, the optimal level of costs should not exceed 35%. Households in Barcelona should invest around 70% of their income, while in some other regions, this figure is over 50%. The decrease in affordability is due to several factors, including:
– high demand for property;
– stable population growth;
– increased employment;
– increased activity on the part of investors;
– availability of large savings among citizens;
– slow pace of construction.
Cristina Arias of Tinsa predicts positive momentum for the construction sector in 2024. However, the current supply is still not keeping up with demand. Most of the new buildings are located near major cities and tourist destinations. At the same time, there is a shortage of vacant plots of land for construction in designated areas.
A significant proportion of new buildings are intended for investment purposes, particularly in areas that attract tourists. This further reduces the affordability of housing for citizens purchasing property for their residence.
Overview of new buildings prices by region
The most expensive new property in Spain is sold in Barcelona at €4,968 per square metre, while the cheapest is in Extremadura at €1,385 per square metre. In the Balearic Islands, the price is €4,399 per square metre, and high dynamics of price growth were also recorded in Madrid and Andalusia, at almost 20%. Rapid price increases are also being observed in other areas, such as Vigo and Málaga. Here, prices have risen by around 25% over the year. Price rises have also been recorded in the suburbs of Barcelona and Madrid.
As for the difference between the primary and secondary markets, the national average ranges from 13% to 59%. However, in some cities, this gap reaches 89%.