House prices rise 3.2% in June, but in the Canary Islands they exceed the 2008 highs, according to Tinsa

The housing market for holiday rentals is on the rise, with prices above inflation

10 Jul. () –

The price of new and used housing in June registered an increase of 0.5% compared to the previous year and was 3.2% higher year-on-year, reaching 1,934 euros per square metre, but in the ‘Islands’ – the Balearic and Canary Islands – it exceeded for the first time the maximum level reached in January 2008, with a 0.5% increase compared to the variation since the maximums of 2007-2008.

With this final closing of the data for the month of June, the year-on-year variation in the second quarter of the year stands at 3.2%, one tenth more than the provisional 3.1% published by Tinsa in its last statistics.

“In June, residential prices have maintained their momentum. All areas reflect monthly growth, except for inland municipalities, which remain stable,” explained the director of Tinsa’s Research Service, Cristina Arias.

He also stated that the strongest growth continues to be seen in the ‘Mediterranean Coast’ and ‘Islands’, with a greater tourist component. As for the employment hubs and their metropolitan areas, they are accelerating slightly compared to previous months.

The average value of new and used housing increased between 0.1% and 0.9% compared to the previous month, with the smallest municipalities in the interior of the peninsula marking the lower end of the range, with hardly any variation.

For their part, the ‘Capitals and Large Cities’ advanced by 0.6% and the ‘Metropolitan Areas’ by 0.4%, which emphasizes the slight boost they registered in May, while the ‘Mediterranean Coast’ (+0.9%) and ‘Island Territory’ (+0.7%) maintained their monthly acceleration at the highest part of the range.

From an interannual perspective, the highest growth is concentrated in the ‘Mediterranean Coast’ (+7%) and ‘Island Territory’ (+8.1%) groups, where the growth rate shows an upward trend.

The ‘Metropolitan Areas’ group (+2.4%) continues to reflect a slowdown in residential prices, while ‘Capitals and Large Cities’ (+2.2%) and ‘Other Areas’ (+3%) maintain their growth rate.

PRICES ON THE COAST ARE INCREASING MORE THAN THE NATIONAL AVERAGE

Housing prices on the coast are growing faster than the national average, except in the case of the northern coast, where prices are similar to the national stability, according to Tinsa during a press conference to analyse the situation and prospects of the residential market.

As regards holiday homes, Tinsa does not foresee a correction in the prices of this type of housing, unlike the national housing price, which shows signs of a moderation in the rise in prices, according to the report.

“The price of a second home in these areas is generally higher than that of a first home,” says Tinsa, who indicate that there is a growing convergence in the price of both products, which is putting pressure on general prices on the coast.

According to experts, the reasons for this price increase are due to the growing importance of foreign buyers in the holiday segment, due to purchases for rental purposes and the presence of professional buyers.

Thus, foreign sales in these areas have reached their highest level, representing 25% of the total, the same levels as those recorded after the price correction following the 2007 bubble.

“We are at a similar level because these foreigners are channelling the savings they still have after this turbulent stage of the pandemic,” says Tinsa.

THE NEW CONSTRUCTION RATE HAS BEEN REDUCED TO 25%

On the other hand, Tinsa has indicated that the share of new construction has been reduced to 25% in 2023, from 30% in the last decade, due to the silting up of the soil and various difficulties that do not allow for agile construction.

“It could also have something to do with the type of profile of the developers who operate in these areas, who when the land is full, cannot carry out large developments, which is why those who usually come are medium and small-sized developers, who may have more difficulty finding financing,” they say.

However, development activity in the holiday segment remains stable or increases in most areas, demonstrating a concentration of construction activity in the second home product.

Thus, 2023 closed with 26,871 visas, above the average for 2015-2019, when 24,000 visas were registered per year. However, the figure for 2023 is lower than that of the previous year.

On the other hand, during the press conference, Tinsa experts indicated that the prices of holiday rental housing are clearly on the rise, with prices above inflation.