Housing in Madrid can be a good thermometer to weigh up the real estate price development, depending on each different area. We must lay stress on this reality, because when the real estate price increase is mentioned, people tend to generalize. Unquestionably, prices have risen considerably. However, they have not increased in an equal manner in each area. For instance, in Madrid prices vary greatly depending on the neighbourhood. We will analyse these differences and the way they develop. Nevertheless, there is meaningful data carried out at the beginning of September by the appraiser society Tinsa. Tinsa shows that with regard to the real estate price increase since the worst time of the crisis, Madrid was only beaten by Barcelona.
It is estimated that in the most demanded areas of Madrid such as Salamanca, Justicia, Arganzuela or Centro the price of housing has doubled in relation to twenty years ago. If we only pay attention to the price increase during 2018, we can see a rise of 20% in the best areas.This fact has alarmed some analysts who believe that there may be a real estate bubble burst. On the other hand, other analysts state that there is no cause for concern. According to the Tinsa report, in Madrid the price per square metre has increased more than 40% in three years. In the second term of 2018, the price per square metre was 2.826 €. However, this price increase cannot be extrapolated to every area of Madrid. It is significant that in some areas far from the centre and quite modest such as Carabanchel, Villaverde or Vallecas, the prices have not risen even though sales have increased more than 40% this year. In this regard, we can find new construction flats located in the south of Madrid at reasonable prices far from the upward trend which prevails in the market. Whereas, in the centre and in other demanded areas, it is difficult to find new construction flats and therefore, second-hand housing prices have rocketed. It is estimated that in Barrio Salamanca the price per square metre has risen to 6.000€, making it the most expensive area in all Madrid. This is why we want to stress the fact that it is a mistake to extrapolate this price increase to all Madrid, even though some areas have undergone a steep price escalation.
THE DECREASE IN PRICE OF SOME REAL ESTATE PROPERTIES
It is an interesting fact that some real estate properties located in high ranking areas such as Salamanca, Retiro or Chamberí, have decreased in price. This especially happens with regard to new construction flats as they are not considered to be prime nor exclusive real estate property. Nevertheless, prime and exclusive new construction flats are sold quickly. However, this fact does not apply to all property in these areas. The buyer of exclusive property looks for a very special product: this means that housing which does not comply with the necessary requirements in these areas, is less in demand. This situation leads to a price decrease if the owner wishes to sell the property.
Picture 01: Fermín Rodríguez Fajardo
Picture 02: Luis García