EDITORIAL |
The real estate portal Fotocasa reveals that Malaga continues to be a city coveted by real estate buyers. Despite the economic and legal obstacles, second-hand housing prices reached an all-time high in October, with an average value of 3,189 euros per square meter and a spectacular year-on-year increase of 14.6%. In fact, Malaga is the second Spanish city, after Palma de Mallorca, which has reached the highest prices both for sale and for rent.
This trend is due to a more experienced and financially solvent buyer, as opposed to the local resident who finds access to housing daunting. Fotocasa reveals that these rising prices are a constant throughout the year and are not affected by adverse economic factors. Malaga continues to be a city sought after by those looking to be part of the Spanish real estate market and it does not look like this situation is going to change in the near future.
According to Fotocasa, Malaga is already the second most expensive city in Spain, after Palma de Mallorca, both in purchase and rental prices. In terms of sale prices, February saw a historic increase of 18.2% year-on-year, surpassing even the warm-up period prior to the real estate bubble. Currently, the average price of second-hand housing in Malaga is 15% above the price recorded during the 2007 bubble, when it was 2,778 euros per meter.
In a more detailed analysis, this Andalusian city has experienced a "rapid and persistent" rise in prices, well above its sister cities. In fact, prices in the rest of the Andalusian capitals are on average between 1,270 and 1,836 euros per meter, except for Jaén, which is the most affordable, with an average of 1,000 euros per meter.
The evolution of prices in Malaga marks a significant gap with respect to other Andalusian cities and has been further exacerbated with the arrival of Covid-19. A trend that began to be noticed after the recovery from the economic crisis of 2008 and has reached its peak today. The Director of Studies, María Matos, has expressed her concern in this regard: "The price of housing has once again reached record figures with the greatest acceleration in the last 17 years. We have never seen such a large price increase in such a short period of time. This rise brings us back to 2006 levels, prior to the housing bubble, when the cost of housing was heating up".
According to Matos, these increases are due to the change in the monetary policy of the European Central Bank (ECB), which has led to a rise in interest rates, which penalizes the average buyer. In addition, the purchase demand has been boosted by the presence of more solvent and expert buyers in the market, mostly foreigners with greater purchasing power than the average resident. It does not help that Malaga has very little public social housing stock, which further aggravates the difficulties of access to housing.
In the rental market in the city of Malaga, the situation is also worrying.
Regarding rental housing, Fotocasa warns of a situation that is even more worrying. In fact, the maximum prices have been recorded in 2022, with year-on-year increases that have even exceeded 30% in some months of this year. This figure represents the largest increase recorded to date in Fotocasa. Although certain indices point to a more moderate rise in October (10.4%), it is still a double-digit increase that reflects great tension in the rental market.
In the case of the city of Malaga, the cost per square meter amounts to 13.89 euros, which represents a 65% increase compared to the values recorded 16 years ago, when it was 8.43 euros. For this reason, Matos explains that the high price sustained for so long is what is generating a decline in demand for rental housing in Andalusia, especially by the most vulnerable groups.
In fact, according to Fotocasa, renters who were looking for housing in this region in February 2023 represented 13% of the market. However, six months later, this figure has dropped to 11%. The loss of representativeness in the market is due to the fact that many claimants are forced to withdraw due to the impossibility of accessing rental prices. As a result, the most vulnerable groups are the most affected by their expulsion from the rental market.
The cost of renting in Malaga, as in Andalusia and Spain as a whole, has reached its historical maximum level with an increasing trend. Since the recovery from the financial crisis in 2015, Malaga has followed this trend, but in a more pronounced way and with much more significant increases.
The shortage in the supply of housing is the main cause of the price increase, which has risen more than 30% in the last year, according to Fotocasa. The gap between supply and demand is becoming increasingly considerable because of this.
The sale of properties, the return of tourist homes to the vacation market and the over-regulation of the market have drastically reduced the inventory. However, demand is declining because a large number of people cannot afford the high rental prices, considered prohibitive, in Malaga. Mato says this is a worrying trend.