NEW home prices in Spain last year produced a 7.1% annual rise- the biggest increase since 2007.

The Sociedad de Tasacion real estate appraisal company predicts price rises will continue during 2023 but it expects the rate to slow down due to the economic situation.

It said new builds were fetching an average €2,732 per m2 at the end of December but still below the historical high of €2,905 reached in June 2007.

The region showing the biggest new property price growth is the Balearic Islands(9.1%) followed by Madrid(8.5%), Navarra(7.2%), Andalucia(7.1%) and the Valencian Community(7%).

By capitals, Barcelona (€4,917 per m2) remained the most expensive, followed by Madrid(€4,125) and San Sebastian (€4,048).

Malaga took the honours as the regional capital where new housing prices had the highest percentage rise last year(9.3%).

Sociedad de Tasacion CEO, Juan Fernandez-Aceytuno, said: “The market behaviour towards the end of 2022 shows the impact of interest rate rises on real estate activity, but with new housing, even at the end of the year, there’s growth that is higher than or equal to that registered in 2019.”

Fernandez-Aceytuno believes that prices of second-hand homes may fall due to inflation, but sustained price growth will continue for new housing.

Meanwhile, real estate portal Fotocasa is estimating overall sales will fall by up to 12% this year after surpassing 600,000 transactions in 2022.

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