Housing prices in the most sought-after areas in Madrid are reaching a historic high just like in 2007. Some weeks ago, we wrote about the growth of the real estate market in Spain and we pointed out that in 2017 new housing is selling well in the Community of Madrid. Just before the real-estate bubble burst, housing prices in Spain reached, in many areas, the most astronomical sums ever. Those were the times of the real-estate boom which later led to the housing crisis. At present, many Spanish municipalities have undergone a moderate recovery. However, we must mention the fact that large cities such as Madrid and Barcelona have followed a different and faster rhythm. What has struck us most is that housing prices in some areas in Madrid have reached the times of the real-estate boom. It seems to be a fact that the real estate market in Madrid has achieved a cruising speed because housing prices have become historic high in some areas. Let´s see in which areas this has taken place.

THE DISTRICTS OF JUSTICIA, CENTRO AND SALAMANCA ARE IN THE LEAD

According to the Urban Data Analtitycs (UDA) report it is estimated that housing prices in the district of Justicia (the most in demand in Madrid) are, at present, only 1% less than those of 2007. This percentage increases slightly in the districts of Centro and Barrio de Salamanca with 2,5%, the highest known prices so far. According to the aforementioned report, these prices should not increase even though they still have a margins rise. Moreover, it is estimated that these three districts are close to the price ceiling. On the other hand, the prices of some districts in Madrid like La Latina, Fuencarral or Vallecas are still far away from those of 2007. Thus, these districts can undergo a progressive price increase within the coming years. In any case, these districts will probably not fetch the same prices as a decade ago. Actually, there may be an adjustment of prices in line with the financial circumstances of the neighbours of these districts. In this regard, the financial companies play a fundamental role in granting credit to the buyers.

SOME KEYS

Foreign property investors have played a decisive role regarding housing in Justicia, Centro and Barrio de Salamanca. These investors have made it possible to nearly reach 2007 prices. They are differential and extremely wealthy purchasers who seek exclusive properties and spare no expense. This fact explains why in such a short time, only ten years, the housing prices of these areas have recovered. We must take into account that after 2007 the prices dropped 40%. Currently, it is estimated that property in the district of Justicia can cost 7.000€ per square meter. This increase in price is not only because of the foreign investors but also because this area has been modernized and renovated and hence, offers its residents attractive premises as well as outstanding services.

Picture 02: Delaina Haslam