07 julio, 2017
Is the property bubble in Barcelona about to burst?
Barcelona is witnessing a surge in rental properties
Due to events such as Brexit and the introduction of the Golden Visa, foreigners are flocking to Barcelona in search of houses and apartments for sale. Foreign investors are drawn to this Mediterranean city due to its cheap price and safe living condition. At the end of the first quarter of 2017, the average house price in Barcelona was €4,123 per sqm. Meanwhile, the cheapest prices per sqm for just an apartment in London or Paris are £7,122.31 and €6,529 respectively.
The majority of foreign investors buying properties in Barcelona don’t actually live there. In fact, after the purchase, they would rent out those properties and earn a decent fixed income each month. This trend increases the number of rental properties in Barcelona so significantly that supply is gradually exceeding demand, which forces property owners to lower the price in order to survive in this fierce competition.
What will happen to the property bubble in Barcelona?
With 13-year experience in the Barcelona real estate scene, Tine Mathiassen, owner of Casamona, predicts that the price will soon adjust in response to the current situation. As owners enter a price war, customers will have many more affordable options to choose from. Since rental price is likely to decrease in the next 6 months, foreign investors might lose interest in purchasing properties as return on investment is significantly lower than before. We hope sales prices for houses and apartments will also decrease within one year.
Overall, the surge in properties investment increases in the number of rentals in Barcelona. According to Tine Mathiassen, this current phenomenon can lower rental price and consequently cause the sales price to drop. Thus, properties owners need to have a wise pricing strategy in order to make profits in this hard time.
For more practical advice regarding this issue, don’t hesitate to visit our blog.