Housing Prices In Barcelona And Madrid Could Be Overvalued By 17%

housing overvalued

Housing prices began to fall in Spain in the last half of 2019 and the impact of Covid-19 has only accelerated the downward trend of the end of a cycle. According to a study by Tecnocasa and Pompeu Fabra University, this pattern is due to the fact that there is a lot of private real estate offer that is overvalued. In fact, overvaluation can reach 17% and 16.5%, respectively, in Madrid and Barcelona. This percentage measures the difference between professional valuations and the price that owners of properties for sale are demanding.

Bankinter analysts estimate that the overvaluation of housing prices in Spain was close to 9% as of December 2020, in relation to family income, and could be higher in prime areas of large cities. Therefore, they expect a price correction similar to that -9% in 2021.

The experts who prepared the report emphasise that “this is the only market study that works with real prices of completed sales and purchases. Other reports use offer or appraisal valuations as a reference, but not complete transactions which have already been carried out.”

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.