Property News from Spain

The price of housing is increasing considerably throughout Spain, both for purchase and for renting. However, CaixaBank experts explain that this increase in house prices is not occurring at the same rate in all the towns in the country. In other words, there is a considerable distance between the most expensive and the cheapest municipality.

On the other hand, it must be taken into account that the Euribor has exceeded 2.4% of its daily rate in September 2022. This rise will cause mortgages in Spain to become more expensive, especially variable rate ones.

According to CaixaBank professionals, in the first quarter of 2022, San Sebastián (Guipúzcoa) was the municipality with more than 25,000 inhabitants with the most expensive price per square meter in Spain. Specifically, 4,207.8 euros/m2. All this, is according to data published by the Ministry of Transport, Mobility and Urban Agenda.

On the other hand, the amount registered in San Sebastián is 7.5 times higher than the 506.7 euros/m2 in Puertollano , Ciudad Real. Thus, Puertollano is positioned as the municipality with more than 25,000 inhabitants with the cheapest price per square meter in the country. In other words, it is an ideal location to acquire a home.

From CaixaBank they warn that “factors such as the geographical location of the home, its orientation (north or south), influence the appraisal of real estate; if it is well communicated and has access to services, usable square footage, age and condition, communal areas, an elevator or central heating or if it has systems that improve its energy efficiency, among other elements, all influence the valuation.

In short, the price of a home in Spain is determined by numerous factors that must be taken into account. Thus, despite the fact that the purchase price has skyrocketed in recent months, the rate of growth is uneven among the municipalities of Spain. Puertollano heads the list of cheapest municipalities in Spain to buy a home, according to CaixaBank and at the same time boasts an AVE (high-speed train) station.

As stated by 'Tinsa', a real estate data digital valuation and management platform, the average home in Puertollano is made up of a four-bedroom apartment and an area between 90 and 110 square meters. The value of the property is around 68,776 euros and the house has an average age that usually exceeds 30 years.

On the opposite side is San Sebastián. In this municipality in the Basque Country, the average dwelling is a four-bedroom flat with an area between 70 and 90 square metres. Likewise, the age of the property exceeds 30 years. However, the average value stands at 444,167 euros;  6.5 times more than in Puertollano.

Finally, CaixaBank experts estimate that “the rise in housing prices may have some continuity due to the rise in construction costs, aggravated by the war in Ukraine and the bottlenecks in the value chains. The forecasts point to the number of sales falling by just over 10% in 2023 and the price of housing slowing down significantly but maintaining a positive growth rate.

Real estate agencies are saying "It's a good time to sell". They are reminding people that the price is stabilising at its maximum and that the demand still has purchasing power and there is still attractive financing available.

As explained by the General Council of Official Associations of Real Estate Agents of Spain, the increases in interest rates that the European Central Bank has applied and those that are yet to come will cause a fall in housing prices, as well as a decrease in the purchasing power of potential buyers and a tightening of financing conditions for mortgages.

According to the agency any owner who wants to sell should take advantage of the current conditions, which adds that in this new scenario, "mortgages are more expensive for both the individual and the investor, but it is with the individual that this increase is going to have a greater impact. The drop in housing prices predicted by the ECB (of around 9% in two years) is logical because there is going to be a part of the demand that is going to disappear from the market and, with equal supply, prices will drop".

The General Council of the COAPI (Consejo General de Colegios Oficiales de Agentes de la Propiedad Inmobiliaria) believes that some buyers are going to try to advance purchases to avoid future increases in both the price of housing and mortgages. However, there will also be another profile of individuals or investors who can afford to wait and decide to operate long-term, once the macroeconomic environment has stabilised and access to financing is less expensive.

In fact, the organisation emphasises that "in the coming months a window of opportunity will open due to the general fall in prices that will benefit investors who have liquidity and can afford to wait for the right moment to buy."

Where is the cheapest city in Spain to live? Establishing which is the cheapest city in Spain is not an easy task, as many aspects need to be taken into account such as the price of housing, taxes or transport.

In this case, it is also important to assess income, as a general rule, depending on the city in which you reside, the salary will be higher or lower. Based on Kelisto's latest study, which was conducted in 2018, there is one city that outperforms the rest.

Assessing the purchase of housing, taxes, transport costs and income levels of the different cities in Spain, it was concluded that Palencia was by far the cheapest city in Spain to live in, with a cost of living 30.06% below the average. After Palencia was Melilla (17.13%) and Lugo (16.94%).

According to the ranking carried out by Kelisto, the cheapest cities in Spain to live in are the following:

1. 1. Palencia - The Cheapest City in Spain
2. 2. Melilla
3. 3. Lugo
4. 4. Logrono
5. 5. Teruel
6. 6. Caceres
7. 7. Zamora
8. 8. Avila
9. 9. Soria
10. 10. Leon

Of course, the fact that they are cheaper to live there does not mean that the salaries are respectively lower. In the case of Palencia, for example, the average annual income is 23,654.17 euros.

As declared by Bankinter, in Ciudad Real the square meter costs 1,018 euros, so it can be said that it is the cheapest place to buy a home today (but not to reside). After Ciudad Real we find Ávila (1,037 euros per m2), Soria (1,041 euros per m2), Lugo (1,050 euros per m2) or Castellón (1,078 euros per m2).

In the case of renting housing, Orense is the cheapest city to rent, with an average of 5.9 euros per square metre. It is followed by Ciudad Real (6 euros m2), Zamora (6 euros m2) and Lugo (6.1 m2).

As far as the IBI (Real Estate Tax) is concerned, as explained in the OCU, San Sebastián is the city whihc has the lowest IBI at 147 euros. It is followed by Bilbao (153 euros), Vitoria (258 euros) and Pamplona (314 euros).

The price of public transport is also a great conditioning factor in understanding the cheapest city in Spain. FACUA has studied the price range and has established which city has the lowest cost of public transport. In this case, it is Logroño, with a price of 0.53 euros for a bus ticket.

It is followed by Ávila (0.55 euros), Salamanca (0.59 euros), Palencia (0.60 euros), Santiago (0.60 euros), Vitoria (0.60 euros), and Segovia (0.60 euros). The most expensive route is in Madrid at 1.83 euros for the bus ticket.

If you want to travel and not spend too much, it is best to choose one of the low season times of the year for visiting. This means that you will have to forget about travelling in summer, at Christmas, at Easter and even on 'puentes' or holidays.

The best dates to travel will be just after the summer, that is, during the month of October, or just after the Christmas season, in the middle of January. They are the cheapest trips you will find, so you could save even more than half of what it would cost you in high season.

Where are the most expensive cities to live in Spain?

Now we know the cheapest cities to live in Spain, let's look at the most expensive cities to live in. To carry out this ranking, similar aspects were  taken into account:

1. 1. San Sebastian
2. 2. Barcelona
3. 3. Vitoria
4. 4. Madrid
5. 5. Palma de Mallorca
6. 6. Valencia
7. 7. Girona
8. 8. Albacete
9. 9. Oviedo
10. 10.Tarragona

In the case of the most expensive cities to live in, in most cases they are also the ones that offer the lowest quality of life, so they are the least recommended to settle and live in, although they are usually good tourist destinations given the wide range of entertainment that is on offer.