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About homes in barcelona

The real estate market in barcelona

Given the obvious attractions of living in Barcelona and the fact that hundreds of thousands of Northern Europeans are buying or planning to buy property in Spain, it should surprise no one that many non-Spanish nationals are now buying property in Barcelona.

The Barcelona property market has risen strongly since 1997 with double-digit price rises in most districts every year with the exception of 1998. A growing Spanish economy, increasing employment, cheaper borrowing (lower interest rates and innovations in the mortgage market), a cultural preference for buying over renting and the impact of rising foreign demand for property in Barcelona, have combined to push up overall demand whilst the supply of property has remained fairly constant (constrained by mountains and sea Barcelona cannot expand through urban sprawl). The rise in tourism to Barcelona has also increased the pressure on the property market as residential property in Barcelona’s most attractive central districts has been converted into hotels. These supply and demand factors explain the tight property market and robust price increases of recent years.

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However, there are clear signs that the Barcelona property market is beginning to cool. Until recently property in Barcelona sold quickly, with little or no room for negotiation over price.

Now however, the average time to sell is increasing and vendors are more willing than before to negotiate over price. Anecdotal evidence from bank managers also suggests that the number of new mortgages being granted in Barcelona is falling (one bank manager describes the market at the start of 2007 as dead) and that first time buyers are being prevented from entering the market by high prices.

Almost all of Barcelona’s districts have experienced double digit price increases in all of the last 6 years. The Old Town has led the way with increases of over 20% most years. Sant Martí (the area nearest the beach that includes Poblenou and Diagonal Mar) has been another strong performer. These are districts that for various reasons appeal to foreign buyers and that were some of the cheapest areas to buy in Barcelona 10 years ago. Over the past 10 years property prices across districts have converged substantially. This suggests that bargain districts do not exist to the extent that they used to.

These figures demonstrate that Barcelona has undergone a sustained period of robust property price increases over the last 6 years. There are various factors driving this growth including the unusually low cost of borrowing, a strong Spanish economy with a paradoxically weak stock market offering poor investment returns, increasing employment, increasing tourism requiring property for hotel use and the impact of growing foreign demand on Barcelona’s fixed supply of property.

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We think it unlikely that prices will continue rising across the board to the same extent in the coming years as they have in the past. In our opinion price increases will slow in the next couple of years with single digit growth or stagnation a likely outcome. However in the absence of any major external economic shocks we think it unlikely that prices will fall in any of Barcelona’s key districts, though we would not argue that it is out of the question.

The behaviour of foreign demand for property in Barcelona will be a key factor in determining the direction and rate of property price changes in Barcelona’s key districts over the coming years. In recent years there has been a notable increase in demand for property in Barcelona amongst foreign buyers. The British are leading the way but they are far from alone. Other foreign buyers include the Irish, Dutch, Germans, Belgians, Scandinavians, Russians, Chinese and the French. We believe that this trend will increase over the coming years as European integration, increasing labour mobility, technology and low cost travel enable more people than ever before to base themselves out of Barcelona for all or part of the year.

HOW WE CAN HELP YOU

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Homes in Barcelona is a real estate broker with over 10 years of property search and sales experience in Barcelona and the Costa Brava. We have lived through both the boom years between 2001 and 2006 and the deep crisis of 2008-2012. Each period was challenging for different reasons. In the boom years (“the good times” as some brokers call them), clients didn’t have enough time to select the right construction company to buy their home from. During the “crisis” period on the other hand, they were unsure if the prices on offer were genuinely the best available and often felt insecure about their future investment.

Both these scenarios are fortunately now in the past. The Spanish real estate sector has finally bottomed out in terms of prices. The developers which have survived after this period now offer attractively-priced properties with a proper legal and administrative foundation.

In addition, banks have repossessed a large number of appealing properties. They are now offering a very competitive property portfolio through selected estate agents, with generous financial terms that can in some specific cases even attain a 110% mortgage value against the sales price (sales price+taxes+expenses).