How to estimate the price of a property?

To know how much a house is worth, you need to take into account its characteristics and the market situation.

Buying or selling a home is one of life's milestones, as it requires a major investment, and many hopes and dreams are poured into it. However, a great deal of stress is also involved. Preparation is needed for everything to run smoothly and for the transaction to be successful. What price should you sell the house for? Is it above the market value? Is it a fair price?

How to know a property's price in Spain?

Several internal factors influence a property's price. For example, its location, characteristics, facilities, surface area and the condition. But it also depends on external factors, such as previous real estate operations in the area, the average price per square metre in the neighbourhood, etc.

Comparing the property with others with similar characteristics is the best way to work out if the property you're going to buy, or sell is appropriately priced or not. Check it against properties with similar characteristics, i.e. the same square metres or type. This analysis is decisive in knowing if the house price is appropriate and is something a serious real-estate broker always do.

At homes-abroad.com we always filter properties in the property's location, compare features and analyse the price range.

Knowing if a property's price is fair: the market's behaviour.

Another useful method to determine if a property's price is appropriate is to know the average selling price in Spain and different autonomous communities and learn about the market's behaviour, i.e. if the property prices are going up or down, etc.

We prepare market analysis which compiles the average property prices in Spain's autonomous communities, provinces, cities and districts.

According to its latest report, the average per-square-metre price in Spain in January 2024 was €2,056 which is 7.2% more than the same month in 2023.

Carry out a valuation.

Hiring a qualified real-estate agent (like homes-abroad.com) with huge local knowledge is one of the best ways to know if a flat is correctly priced. Factors such as location, layout, access roads, public services and state of conservation are assessed to value the property. Other important aspects are the built and useful surface area or the facilities (swimming pool, lift, etc.).

2024 PER in Spain

The price-earnings ratio (PER) is another method to calculate if a house or flat is expensive or cheap. Investors usually use the PER to know if a company has a valuation at an attractive price. If the result is less than 15, it is considered attractive, but if it is greater than 20, it is considered high.

For housing, the PER calculation is used to value the property's selling price and know how profitable it would be if rented. To do this, the sale price is divided by the annual rent. For example, if a flat is sold for €200,000 and can be rented for €1,500 per month (€18,000 annually), the PER would equal 11.1. That means it would take just over 11 years to recover the investment.

Tools for calculating a property's price in Spain.

A property's rateable and market values are key to calculating its estimated price. Normally, you should try to sell above the rateable value, as this only takes into account objective values, so a property's market value will be above it (it is recommended that the rateable value is 50% of the market value).

The market value takes temporary factors as a reference, such as demand, the area, or the economic situation. To sell a property more profitably, always look at the latter.

Find out if the property price is fair.

With a property valuation tool, we can give an estimated property price in three simple steps. Just send us the address and the Catastrall number of your property and we will give you a detailed estimate within 24 hours.

What happens if I buy a flat below its value?

Buying a flat for less than its rateable and market value can negatively affect the buyer and the owner in matters such as paying Property Transfer Tax (ITP). When you pay less than its actual value, the Treasury may claim the corresponding part of the fee with a surcharge in the event of delays.

For more information, about buying or selling property in Spain, please contact us by mail info@homes-abroad.com or give us a call at +34 609977262.