Aug 10 2007
After ten years of rapid but steady growth, property prices in Barcelona are lower than they were at the beginning of the year. Does this indicate a dramatic market crash, or just a sign of settling down?
Research into the second quarter of 2007, conducted by Spanish property information portal Idealista, reveals that the price of property in Barcelona city and it's surrounding municipalities have dropped by an average of 1.3%.
The report, The Quarterly Evolution of Resale Home Prices, details the findings of a survey sample of 10,689 homes in Barcelona, roughly half of which are located in the city centre, with the other half located in 21 surrounding municipalities of the city. The analysis was conducted on a mixture of private sale figures and those reported by real estate professionals.
The results place the average price per square meter of property in Barcelona at 4,285 euros compared to 4,888 euros as shown in the same report covering until the end of March, earlier this year.
While prices fell in all areas covered by the survey, the Les Corts district showed the most dramatic drop of 3.2%. Four other districts in the city showed a drop in excess of one percent, those being Ciutat Vella, Eixample, Sant Martí and Horta Guinardó. The most exclusive area of the city, Sarrià- Sant Gervasi, reported the lowest fall at a figure of 0.2%.
Reports in the press, particularly from Great Britain, are reporting these figures as early evidence of a market crash, set to ruin the future stability of Barcelona's property industry and jeopardise the return on investment for local and foreign citizens who have chosen to invest in property in the Catalan capital.
But other sources such as Spanish Property Insight, seem to feel that it is a little early to panic: 'The certainties of Spain's property boom are over, but what takes its place- a soft landing or something less agreeable- is far from certain.'
SPI acknowledges that the market appears to be entering a cooling off period, indicated not just by a decrease in prices but also by an increase in selling time and more instances of price negotiations in the current market, however it feels that these recent figures aren't necessarily a cause for panic.
One factor highlighted by SPI as likely to have a direct impact on the markets future is foreign investment. Considering the many factors that make Barcelona so attractive, such as a stable economy, favorable climate, cultural richness and natural beauty, these recent figures are unlikely to affect a foreign investors interest in the city.
Prices may for now, be slightly lower than they have been in the past, but they are hardly likely to influence the appeal of Barcelona as an excellent location for a holiday home or investment property, if recent increases of tourist numbers are anything to go by.
SPI also cites figures from Barcelona's Municipal Government indicating that figures from the last ten years show a favourable overall increase of 215%, even more so in the old areas of town, by as much as 350%.
What's encouraging about this, is the fact that most of the increase has occurred in the last six years. Perhaps this could provide investors with a hint of optimism for the six yet to come? Time will surely tell.