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Spanish Housing reached the bottom in 2013, but is it still a good time to buy your own apartment in Spain? Blog Series Part 2/3

Spanish Housing reached the bottom in 2013, but is it still a good time to buy your own apartment in Spain? Blog Series Part 2/3

Spanish housing market developments in the 2000s.

Is it a good time to buy your own apartment in Spain?

Spanish Housing Base Touch 2013, Blog Series Part 2/3


The overheating of the Spanish real estate market and the subsequent collapse in housing prices was felt across Europe. As we said in the previous blog, the Spanish banking sector would have collapsed without EU´s assistance in 2012. In this blog, we are focusing on housing price developments and we will end up with our own assessment whether it would be a good time to invest in Spain.

The sharp rise in house prices in Spain dates back to the early 2000s. From 2003 to 2008, housing prices rose up to 70% depending on the region. In Spain, the highest level of housing prices was in 2008. Focusing on areas favored by Finns; on the Costa del Sol in the Malaga region and on the Costa Blanca in the Alicante region, the peak in prices was in 2008 in Malaga and in Alicante a year later, 2009.

After this, the average price reduced by 40-50%, which means that housing prices were cut to half in practice. In some cases, the bank's real estate-secured housing received up to -70% below peak year price requests. Depending on the region, the lowest real estate prices were in 2012-2014.


Focusing on housing construction and sales volumes for new homes and their price development in the Alicante region, we can say that in 2006 a total of 35,843 new apartments were sold. The average price of these new homes was € 152t. When you compare this with the total new residential production in Finland, which has been around 12,000 new condominiums and about 11,000 detached houses per year over a long period of time, the total volume is better understood.

When prices collapsed in 2013 and the deepest recession in real estate market reached the rest of Spain, Alicante was still being built. The level of sales of new dwellings was at a low level, but a total of 3,521 new dwellings were sold in the Alicante region. This is 1/10 compared to the peak year, but still the amount is pretty big. At that time, the average prices of new homes sold were € 142t. 3815 new homes have been sold in Q1-Q3 this year, and the estimate for the total year is 5,000 new homes. The average price for the first half of the year was € 203.

Where are we going now? Housing prices have risen steadily since 2014. The average price increase has been 5-7% per year. In the overall market, taking into account the new and used area, we are still about 25% below the peak years. In practice, in the province of Alicante, this means that the prices of second-hand homes are around 30-35% below the peak price levels and for new homes the price is about 10% below the peak years. Prices for new dwellings are currently mainly affected by rising construction prices and building costs. Similarly, the new homes have improved considerably compared to 10 years ago. Building standards have also tightened and improved, and we will tell you more about this in the next blog.

As a whole, looking at the situation of the Costa Blanca from an investor's point of view, the beach areas in Torrevieja and Costa Blanca have been completed in terms of new construction. New stunning residential areas are being built, about 2-4 kilometers inland for more peaceful areas. With space, the pool areas, gyms and green areas that are really spectacular. The beach line is also being built, but then we look at areas that are about 10-15 kilometers north or south of Torrevieja. Prices for new houses have continued to rise, with annual increases of around 5-7%. Nevertheless, the construction of these new houses in the less prosperous areas offers an excellent opportunity for high quality housing, close to services and still at a very reasonable price.


In the area of second-hand housing, there is still the possibility of utilizing the collapse of housing prices in downtown Torrevieja. Prices are still around 35% below peak year price requests. However, there has been a strong increase in demand for good city center destinations, but these opportunities need to be tackled very quickly. The apartments also need to be prepared for a thorough renovation. After that, the apartments are very interesting rental properties, both for long-term and short-term rentals.

In the next blog we will explain in detail the improvement of building standards and what kind of regulations are related to new construction.

Source: Official Statistics of the Spanish Ministry of the Economy: www.fomento.gob.es

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