The real estate market in Malaga is unleashed. The city has set a new historical record in the price of second-hand housing in the month of October, which places the cost of houses 15% above the time of the real estate bubble.
Specifically, Malaga capital It closed October reaching the maximum sales price with 3,189 euros/m2 and a year-on-year increase of 14.6%, according to Fotocasa data.
This situation is not exceptional, since it has been repeated since the beginning of 2023, where Malaga capital has set historical price records every month throughout the year. Not only has it exceeded 3,000 euros/m2, but it has done so at a dizzying pace because the year-on-year increases are very significant. Thus, this market has presented double-digit increases, as the increase of 18.2% year-on-year in February which is the highest increase detected in all history, even above the 17.4% in January 2006, in the warming period prior to the real estate bubble.
Does this mean that Malaga is headed for a new real estate bubble?
Right now, the price of second-hand housing (€3,189/m²) It is 15% above the price recorded during the 2007 real estate bubblewhen it was €2,778/m².
“The housing market is in full transformation as it is adapting to the new reality of high interest rates, constant inflation and legislative changes. However, despite the variations, participation in the Andalusian market is recovering “, they explain from Fotocasa.
Trading presents 17% of intense activity, rising two percentage points compared to the previous semester (15%) and its trend continues at an upward pace. This figure indicates that Buying interest remains strong in the face of adversity and market uncertainty.
With such enormous growth, the pace of price increases in Malaga has been very rapid and persistent. “So much so that there is a great gap in the evolution of Málaga compared to the rest of the Andalusian cities. The data recorded by Fotocasa also shows that this trend, in which Málaga separates itself from the group, has been accentuated with the arrival of Covid-19, but it was already an inclination shown since the recovery from the economic crisis of 2008,” they explain.
“House prices once again reach record figures with the greatest acceleration in the last 17 years. We had never detected such a large price increase in such a short period of time,” warns María Matos, Director of Studies and Spokesperson for Fotocasa.
“This increase returns us to the levels of 2006, prior to the real estate bubble when the cost of housing suffered a great increase. These significant increases coincide with the change in monetary policy of the increase in interest rates by the ECB. Purchase demand has resurfaced due to a more solvent, more expert and experienced buyer profile in the market as an investor. In addition to representing a high percentage of the foreign buyer, with higher purchasing power than the local resident. A situation that complicates access to housing, since Malaga has practically no stock of public social housing, which further aggravates the difficulties,” says Matos.
High rent prices drive out tenants
More worrying is the situation of the rental market, which has been showing maximum prices since 2022. The increases have exceeded 30%, presenting an increase of 31.3% year-on-year in January 2023, which represents the highest increase in the history of the Fotocasa index. At the end of October the increase is more moderate, 10.4%, although it is still a double-digit increase that reflects great tension.
The cost of renting in Malaga (13.89 euros/m2) is 65% above the price 16 years ago, since it stood at 8.43 euros/m2. The high price maintained for a long period of time is what has caused a decrease in participation in the Andalusian market, more particularly on the rental demand side.
In February 2023, tenants looking for housing in Andalusia represented 13% of the market, six months later, 11%. This is a loss of two percentage points caused by plaintiffs who withdraw from the market due to not being able to access the prices presented. The lowest incomes and most vulnerable groups are the main affected by this expulsion from the lease.
“The price of rent in Malaga, as in Andalusia and practically all of Spain, has reached its historical maximum level, with an upward trend. Since the recovery from the financial crisis, in 2015, Malaga has followed the same trend as the rest of the cities, but in a more accentuated and intense way and presenting much more pronounced increases,” says Matos.
“Although 2022 marks a milestone in the evolution of this market with the reduction in housing supply by more than 30%, it is the main cause that pushes the price up, since each time the gap between supply and demand is more considerable. The craze to sell, the return of tourist homes to the holiday market and the overregulation of the market, considered by the owners, have drastically reduced the stock. However, demand is beginning to decline due to not being able to cope with the high rental prices that are considered prohibitive for a significant volume of Malaga citizens,” explains Matos.