Madrid’s property market coming to life!

21 April 2016

Economic recovery is, slowly but surely, happening within the Construction sector, especially for housing. Madrid is one of the communities that is leading the way in the Real Estate market, which can be seen by the rise in the price of land as well as the cost of building a house. Based on this, and after a decade of freefall of prices that started in 2006, this could be the start of recovery for the Residential market.

The confidence of buyers and investors during the economic recovery, the approval of legal measures that favour foreign acquisition in Spain and the readjustment of the housing stock have assisted in making flats an alternative investment for profitability and security.

Another indication of the sector’s recovery is the decline of new build’s waiting to be sold. According to the study, Census ST, developed by ST Valuation Society, there are 5,474 new homes in Madrid that are pending sale in 2016, compared to 8,898 in 2014 (61% less), and due to this stock absorption trend, sales of new houses in the Community of Madrid could run out in ten months. On the other hand, in the Madrid capital, 82.5% of the total stock of existing homes has been sold off in two years and from the 2,158 homes recorded for sale in 2016, about 80% are new units. Another important and interesting piece of information to show the current real estate scenario is the increase in sales of off plan proeprties representing 58.1% compared to 36.2% of the supply of finished housing. In addition, offers for off plans builds have increased 148% in Madrid Capital. The study reflects an increase in the average size of the homes that are part of the stock (counteracted with smaller developments that have gone from 71.8 to 47.6 dwellings per housing promotion) and an increase in the average price of housing in the Community of Madrid.

This data proves the rebound in the housing market in Madrid, and the need to re-promote and build to generate supply, otherwise price increases may be seen due to the failure to meet demand.

Rafael Juristo Contreras is the Regional My Lawyer in Spain Partner for Madrid.

My Lawyer in Spain

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My Lawyer in Spain

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