“Housing prices will continue to rise due to product shortages, high demand and the addition of new high-end projects”
José Luis Sanz
Residential & Alternatives. Capital Marketsjoseluis.sanz@savills.es
The residential market in Malaga has experienced a steady increase in prices in recent years, with particular vigour after the pandemic.
This scenario has been motivated by the scarcity of finished product in the face of growing demand, both in new and second-hand construction, and by the scarcity of land available for immediate housing development. The insufficient supply has had a notable impact on developing land deals such as Cortijo Merino/Amoniaco and Sánchez Blanca/Distrito Z or various PERIs (Special Interior Reform Plans) in transformation zones. This has been a necessary step to meet the intense demand for housing that continues to grow in the city. Land management is the key to a sustainable and balanced residential market in the city. Generating land on which attractive, modern projects can be developed, aimed at all customer profiles, will create competition in the market, which is essential to easing price tensions. This balance in prices thanks to new projects is the main factor in ensuring the future quality of Malaga as a city to live and work in.
“Malaga needs new projects. The more than 14,000 homes planned, some already under construction, seek to alleviate the tension between demand and supply”
Property deals 2021
Evolution of freehold housing starts
Distribution of new freehold housing transactions
New freehold housing transactions
The city's residential market is undergoing a period of high buyer and investor interest. Despite inflation, rising interest rates, construction costs and supply shortages, developers remain in good health and carry little debt. This, together with household savings and good activity on the part of national and international demand, presents a very solid residential sector, but with a shortage of supply.
So far this year, the average price of multi-family housing in the city has increased by 22% compared to 2021. This increase has been caused by several factors: increased demand generated by the entry of new market niches such as luxury products, changing needs post-pandemic, the establishment of new multinationals in the city and a shortage of finished product supply (27% lower than in 2019). The lack of new construction supply is also having an impact on second-hand housing prices and rental prices, both of which are on the rise, causing further tension in prices and available supply. The problem of access to housing for younger profiles is a reality and continues to worsen, causing a migration of this type of demand towards areas or municipalities close to the capital. Churriana, Alhaurín de la Torre or Rincón de la Victoria are clear examples of the current supply of available land. Significant increases can be seen in these areas, such as in Alhaurín de la Torre, where the average price of multi-family housing has increased by 63% compared to 2020. The market situation has increased the interest of investment funds in developing housing in these locations. The focus on major developments that are changing the city's skyline, such as the Málaga Towers and Martirícos projects, together with the low existing supply and the growing development of the city's business fabric, driven by the attraction of multinationals, leads us to forecast slight price increases for the rest of 2022 and 2023, with a clear tendency towards stabilisation. We will also see a slowdown in consumer purchasing decisions due to the current uncertainty about the economy. Malaga is the Spanish province with the highest population growth and the second fastest growing international population. There are more than 14,000 housing projects in the pipeline that will ease price pressures. However, the trend of increasing demand in the medium to long term indicates the need for new projects to ensure a balanced and quality housing market in the city.
AVERAGE PRICE AND VARIATION
Evolution of new residential supply
Evolution of new construction average price
Multi-family dwelling
Single-family dwelling
Highlights
“The average price of multifamily housing increased by 22% in the city by the end of 2021. For 2022 and over the next few years, we estimate more moderate increases”
