Low supply of Costa del Sol property leads to record prices

Low supply of Costa del Sol property leads to record prices

A recent report finds that the Costa del Sol property market is one of the most dynamic in Spain. Demand is higher than ever, but a supply shortage means that sales and rental prices continue to soar. As a result, house prices have reached their highest ever.

New record in Costa del Sol property prices

According to an analysis from Idealista, the Costa del Sol property market ranks as one of the busiest in the country. Consequently, real estate prices recently rose to their highest on record.

Idealista found that the year-on-year uptick in October reached 11%, taking the average square metre on the Costa del Sol to €3,049. Some municipalities experienced even higher increases, such as Torremolinos (up 14%) and Rincón de la Victoria (up 14.4%).

A total of 19 municipalities saw house prices hit new record highs in October. They included the capital of the Costa del Sol, Malaga, and popular resort areas such as Benahavis, Estepona, Fuengirola, Marbella and Mijas.

Idealista attributes the record asking prices to unprecedented demand and lack of supply. This tandem is set to continue for the immediate future because new construction is failing to keep pace with demand.

Most and least expensive property

At the top end of the scale were the municipalities of Marbella and Benahavis, traditionally the most expensive for Costa del Sol real estate. In these two markets, the average square metre price exceeded €4,000. Marbella had the most expensive property, with a square metre price of €4,408.

Inland destinations on the Costa del Sol ranked among the cheapest, and several had square metre prices at below €1,000. They included Teba, Alameda and Campillos.

Rental rates also soar

Idealista also reports that the Costa del Sol rental market is affected by supply constraints and to a greater extent than property sales. As a result, rental rates have skyrocketed by 16.5% over the last year. They now average €13.50 per square metre, just slightly below their record set in July.

As is the case with property prices, some municipalities have experienced considerably higher upticks in rents. Alhaurín el Grande saw the biggest hike (up 25.6% in the year), with Benalmádena close behind (up 17.4%).

Most expensive rentals

In October, six municipalities set new records for rental rates. They included Torremolinos and Malaga. The highest rates were in Marbella and Benahavis, where the average square metre costs €16.40 and €15.80, respectively.

Buy-to-let returns

According to the report, buy-to-let owners in Malaga can expect 5.9% a year. This return is similar to cities like Barcelona, with a 5.8% ROI but higher than Madrid (5.2%).

(Source: Idealista)