Crisis? What Crisis? Housing prices in Barcelona on the rise again.

Although the unemployment rate has only slightly dropped below the 20% mark, a new housing bubble seems to develop with prices well on the rise.

Renting

For the example of the Sant Martí district, the following graphic shows how rental prices have gone up during the past 12 months. On the fotocasa and Habitaclia websites (Spanish real estate portals for renting and buying) prices have begun to rise significantly in August/September 2016, yielding increases of 7-8% in a single quarter respectively. If we extrapolate this to August/September 2017, we obtain a 12-month increase in rents of around 30%!

Buying

For buying a place, the numbers look similar although not quite that dramatic (yet). Averaged over all city districts, square meter prices have risen in the past 7 months from March-October 2016 by about 7-8% which would yield a projected 12-month increase of roughly 13%. In the inner city (not shown) the projected 12-month increase is of the order of 15-17%.

At the same time, salaries have been stagnant and unemployment has only marginally decreased. Most of the demand is driven by foreign investors who are increasingly discovering the Spanish market.

Needless to say that most locals cannot afford these prices and are driven out of the central districts. The median salary in Barcelona is about 1000 Euros, which means that 50% of working people have less than or equal to 1000 Euros. If you have to spend of the order of 600 Euros for a small 1 bed apartment in a central district, it goes without saying that most people cannot afford to rent their own apartment, let alone buy one. In an effort to contain these price increases, Ada Colau, a former activist/squatter and current mayor of the city, extended the moratorium on new tourist licenses (needed to rent a room or apartment to tourists) already implemented by the previous administration, thereby also criminalising those people who were trying to supplement their otherwise meagre incomes by occasionally renting out single rooms to tourists. The development in housing prices suggests that this measure has been rather ineffective in containing the problem. On the contrary, it has meant that low income people who depended on this supplementary source of income, are now forced to look elsewhere or face fines and charges.

And even the decried tourist sector has felt the effect. It is becoming increasingly difficult to find decent accommodation in Barcelona for anything below 80-90 Euros per night. For a city where a cheap meal can be had for as little as 10€ and a beer for 1.50€, this seems disproportionately high. Clearly, it is only one sector that benefits from this type of policy: the hotel industry.