A notable recovery in 2021

Real estate market activity in Spain recovered dramatically in 2021, after collapsing in 2020 due to the containment measures put in place to combat the Covid-19 epidemic. Nearly 670,000 real estate transactions took place last year, a level not seen since 20071 (see graph 1). According to the INE, house prices increased by 3.7% in 2021, continuing the strong pace of the last six years (average annual increase of 4.9% between 2015 and 2020). Although house prices are still 10% below their summer 2007 peak, price growth is accelerating. Tinsa figures show this trend continued in the first quarter of 2022, with a 6.8% year-on-year increase in March. This indicator is well correlated with the quarterly INE index.

However, these figures hide important differences between regions. In the Madrid region and the tourist and/or densely populated regions (Balearic Islands, Melilla, Ceuta), real estate prices have recorded rapid growth since 2015; indeed, prices in some areas are now higher than they were in 2007/2008. Conversely, in rural and less populated regions (Extremadura, Castile and León, Navarre, Aragon), prices fluctuate at least 20% below their level fifteen years ago. That said, the number of real estate transactions in most of these areas has also started to increase, suggesting that price increases could be faster this year.

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