Housing shortages are fuelling dramatic price increases in some of Europe’s major cities, and Madrid is now leading the pack with a jump of almost 11 per cent year-on-year.
Even with interest rates at multi-year highs, residential property is booming in the Spanish capital, driven by locals desperate to get on the housing ladder before they are completely priced out and investors looking for returns.
Madrid has been particularly affected by an influx of Latin American money, exacerbating the squeeze on the market, as well as hype about certain districts. Carabanchel, traditionally a working-class area, was named the third coolest neighbourhood in the world last year. New house building is at historical lows, there is little urban land available for construction and few plans for new developments. Housing stock has fallen 11 per cent in the last year.
With so few properties available, sales fell 8 per cent in the first quarter, according to the statistics office.
“An increasingly large housing deficit is accumulating,” said Beatriz Toribio, head of the Association of Builders and Developers of Spain. “Madrid is a very important economic hub and more and more people are coming to work and live in the city. Add that to the tourism pull, the cultural pull. The demand is increasing.”
Toribio wants more done to reduce bureaucracy and labour shortages, and says the government also needs to develop a long-term vision for housing.
