The residential market continues to adjust. Whilst prices in other segments of the resales market are in freefall, investors are starting to view luxury properties as a safe haven and are investing a significant amount of their own money, with low financing requirements. Demand has increased over the second half of the year, and has not been affected by the government’s planned tax changes.
On average, prices per square metre in the most exclusive areas of the city have adjusted by 8 per cent compared to 2011. This is undoubtedly due to the increase in supply, which has led to more competitive prices. In this regard, the amount of properties on the market has increased by 13 per cent year-on-year. The area with the highest increase is Chamberí, where the number of properties on the market has risen by 7 per cent. The amount of stock in the Salamanca district has remained stable and it has seen the most deals.
The average unit price for properties has reached the €1,465,000 (HK$15.21 million) mark, which is a 4 per cent year-on-year increase. As a result the market has remained stable, with 43 deals signed this year. The total sales volume in 2012 amounted to around €63 million, which beats last year’s figure. This means that prices are beginning to move more in line with buyer expectation.
Out of the 43 deals that were completed, 32 per cent were in the Habana district, 26 per cent in Salamanca, 25 per cent in Chamberí, 11 per cent in El Viso, 4 per cent in Jerónimos and 2 per cent in Justicia, with an average of 10 per cent difference between the asking price and sales price negotiated between vendors and buyers, which shows that supply and demand are converging.
The Los Jerónimos district leads the ranking of prices per square metre for the most exclusive areas of the capital, followed by the Paseo de la Habana area. The Salamanca district, which traditionally has the highest level of residential property stock, has slipped down the rankings and currently stands below the El Viso district. However, prices in Justicia, Jerónimos and Chamberí were less volatile compared to last year and other areas.
Buyers are whetting their investor appetite after seeing slight adjustments in prices; however, they are not compromising on the exclusivity, quality and the location of these types of properties.
According to the latest report by the consultancy Knight Frank, house prices in Spain are continuing to fall, and are still a far cry from those seen in cities such as London, where prices have already adjusted and have now increased by 11 per cent, or Moscow (5.7 per cent) and Zurich (3 per cent). However, prices are not too far off those seen in France, where luxury residential property prices have declined by 4.5 per cent.