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Málaga: Home Values Continue Dropping As Rates of Renting Increase

 

Article from Spanish Real Estate website

 

The housing sector of Málaga continues to be left in a lurch and wracked by uncertainty. These are the main conclusions of the Malaga Residential Market Report in 2011 by Aguirre Newman, which points to a drop in home values thanks to the restructuring of products for sale into rentals. In addition, it is anticipated that this trend will continue growing during 2012 and that prices will fall 20% further in the capital of Malaga and its metropolitan areas.

According to the conclusions of this study, the time it takes to sell a multifamily home has increased to 80.1 months, because of the difficulties in securing a mortgage and the uncertainty of the job market. As a result, the demand for rentals has clearly increased.

Aguirre Newman points out that the supply of homes in the metropolitan area of Malaga consists of around 1,485 flats and 164 single family homes, which means a drop of 14.7% compared to 2010. It also explains that there is a lower number of homes available for immediate occupancy, which have gone from 1,806 in 2010 to 1,509 in 2011 (-16.44%).

In the case of single family homes, there has actually been a reduction of the time it takes to sell, from 76 to 56 months, due to new price adjustments.

 

According to Aguirre Newman, the limited sales that have been made in recent years do not correspond with the “actual need” of the creation of homes, but the economic circumstances and the difficulties in getting a mortgage cause the potential demand to be “expectant”.
Also, it is anticipated that new offers will continue disappearing in the meantime and it will be difficult to start new projects because of the few prospects of being able to secure necessary financing to bring projects to a close. What will, in fact, increase, is the percentage of homes available for immediate occupancy, like with the volume of completely finished homes that are not selling.
The “typical” multifamily home has 101 square metres (including common areas), and is worth 217,581 euros (2,151 euros per square metre), a price that has dropped 7.6% since 2010.

The central district continues to be the most expensivewhen it comes to this type of house, although it has not escaped either from the lowering of prices. The reduction has been 16.2% in one year, staying around 2,867 euros per square metre. On the opposite side is the district of Palma Palmilla, where homes cost on average 1,129 euros per metre, 14.9% less than the previous year.
In the case of the single family home, having on average 198 square metres and priced at 1,485 euros per square metre, (that is to say, 293,820 euros), the drop has been 18%. The prices have only gotten higher in one district: Puerto de la Torre (Tower Port). This fact moves Puerto de la Torre into the position of having the most expensive houses, displacing Málaga Este (East Malaga), that traditionally occupied first place in this category.

 

In Puerto de la Torre one pays 1,794 euros per square metre on average. In Rincón de la Victoria (Victoria’s Corner), the lowest prices for single family homes have been recorded, with 1,301 euros per square metre.

 

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