Madrid’s house prices rise 24% as real estate crunch deepens

[MADRID] Housing prices in Madrid soared the most on record in April, underlining Spain’s deepening residential real estate crisis.

Asking prices for houses increased 24.3 per cent from a year earlier, to reach an average 5,467 euros (S$8,020.46) per square metre, according to Idealista.com, a real estate listings website. The Spanish capital has become the second most expensive city in the country. 

Real estate affordability is increasingly a major concern for both politicians and voters in Spain. Prime Minister Pedro Sanchez last month announced a plan to try to create private-public partnerships to accelerate house building, with the government earmarking 1.3 billion euros for it over ten years as the premier said the country needs to build “more and better” homes.

Madrid’s price rise is more than double the pace in Barcelona, where prices were up 11.7 per cent last month. Asking prices in Madrid were rising at a pace of 11 per cent a year ago.

The housing crisis is due to a combination of factors, including a lengthy permitting process, a scarcity of new land available for construction and a large influx of immigrants. In the capital, the price surge is compounded by the arrival of wealthy foreign investors, mainly from Latin America, who have sparked a boom in demand for high-end property. BLOOMBERG