Costa News Spain Breaking News | English News in Spain.
Bank of Spain warns that property prices are inflated by an overvaluation.
A lack of available housing coupled with rising household incomes has led to an overpricing rate between 1.1% and 8% as a national standard.
The Financial Stability Report of the entity does not provide regional breakdowns, but it suggests that Madrid and Barcelona have some of their biggest problems due to the high concentration of property.
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Daniel Perez, the bank’s Director-General of Financial Stability said that house price increases are caused by a shortage of supply. However, overvaluation is still at a moderately high level.
Calculations were made using prices at the close of the last year. Over the course of six months the overvaluation range has changed dramatically, from 0.8% – 4.8% to the current estimate, which is between 1.1% – 8.5%.
According to the Bank of Spain’s estimates, the real price of houses will have risen by 11.5% at the end of the 2024 compared to pre-Covid pandemic levels.
This figure is similar to that seen in 2004, but it’s still 22% lower than the maximum reached at the heights of the mortgage boom, in 2007, before the bubble burst.
Recently, the bank estimated that there will be a housing deficit between 2022-2024 of between 400,000 to 450,000 homes.
It said the imbalance was particularly ‘significant’ in five areas, namely Alicante, Barcelona, Madrid, Malaga, and Valencia which totalled up, account for over 50% of the defecit.
There are many areas where there is a large amount of housing for tourists, and the foreign buyers have pushed up prices.
