Housing prices double, 10% tax jumps

From 300,000€ to 600,000€: buying an apartment has become twice as expensive

An apartment that a decade ago did not reach 300,000 euros was sold for 500,000, according to a forum user. The buyer already has a plan: four students at 450 euros each, 1,800 euros in monthly rent. The operation summarizes the mess described in the thread: many who bought between 2014 and 2017 have seen their property revalue without lifting a finger, and those buying now face prices that double those from a decade ago and a tax that grows in the same proportion.

The arithmetic circulates from the first message: before, 300,000 euros plus 10% transfer tax, 330,000. Now, 600,000 plus that same 10%, 660,000. It is 30,000 euros extra in taxes just from the price effect. The 10% rate in communities such as Catalonia and the Valencian Community is accepted by whoever opens the thread.

The 2013 apartment that a forum user saw go from 129,000 euros to 280,000

Concrete examples better portray the jump, according to those who recount them. A new development from after the crisis, those that were left unfinished and completed four years later, was sold in 2013 for 129,000 euros plus VAT. That same product, today second-hand, is advertised between 280,000 and 290,000. More than double in just over a decade.

Another reference provided by another forum user: a two-bedroom, 70-square-meter apartment sold for 430,000 euros in 2022, which seemed crazy to him because he assumed it would drop. Comparable ads now ask for more than 500,000. The forecast failed. And the correction many expected did not arrive.

Why are housing prices rising in Madrid and Barcelona if they are already unaffordable?

In traditionally expensive districts, the increase is measured in months, according to one participant's account. Two years ago, in the more modest areas of a district like Retiro, decent second-hand apartments were found between 200,000 and 300,000 euros. Now, a mediocre 70-square-meter apartment moves between 400,000 and 500,000, and 100-square-meter units do not fall below a million. The one-year increase is described as brutal.

The underlying argument is supply: it is argued that there is little housing available in high-demand areas and many people willing to pay for it. Demographic pressure—the increase in resident population—appears as a demand factor, although this thesis is debated and does not by itself explain the gap between salaries and prices. In fact, some estimate that 200,000 or 300,000 people enter each year, to which others respond that these newcomers cannot afford 250,000 euros for an apartment.

Those who bought and got trapped

Timing the market does not guarantee a win. A recurring case: a 165,000-euro mortgage signed in late 2016, already paid off, and a property that is worth double, according to its owner. The paradox is that the owner is trapped: to move to something better, they would have to pay doubled prices, so they stay where they are until inheritance or life says otherwise.

The diagnosis coincides: the best window was between 2014 and 2017, when there were cheap apartments but credit was scarce and it was rare to find a home without some relative living in it. Those who signed then at a fixed rate of 1% or lower have today a position the market no longer offers.

The alternative pointed out: stocks, gold, and yogurt lids

Against bricks, the uncomfortable comparison posed by a forum user: 145,000 euros invested in the MSCI World in 2013 are worth 580,000 today, and in the S&P 500, 870,000. This is the argument of those who maintain that the real estate windfall was not such if measured against a global index. The counter-argument comes from renting: some say an apartment yields 7,000 euros a year, a 50% annual return, something no deposit matches.

In Zaragoza, an apartment to be renovated for 35,000 euros with 200 euros in monthly mortgage yields 7,200 euros a year today and receives offers of 100,000, according to whoever bought it. It was then pointed out as crazy. The full details of that operation, with timelines and annual returns, are the type of account not found in market reports.

The tax is not just paid by the buyer

In the transaction bill, it is not all 10% from the buyer. The seller also pays their share, as noted in the thread: if it is not a primary residence, they pay capital gains, and in any case, the municipal land value tax, which taxes the land even if the sale is of a primary home. A cost many discover when signing.

Will housing prices drop? The tug-of-war between two narratives

One current holds that housing is condemned to fall and that buying now is reckless; some even speak of a 60% drop in one year. On the other side, the market narrative: apartments sell, new construction is shrinking, and construction costs are not falling, so the margin for adjustment is limited.

In between lies the evidence of cycles: the previous bubble deflated, but some maintain that current prices in high-demand areas already exceed the peak. And bears have been wrong for years, which does not give them reason for the future nor take it away.

With these numbers, the question is not whether bricks rise or fall, but how long it takes to stop being profitable. Those who invested 145,000 euros in the MSCI World in 2013 have 580,000 today. Those who bought an apartment at the 2008 peak took more than fifteen years to finish paying it off.