To know how much a house can be sold for, one must consider its characteristics and the market situation.
Author: Eduardo (Contributor to Idealista News)
Source: Idealista

Buying or selling a home is one of the most important moments in life, as it involves a significant investment and carries many hopes. However, it also brings great stress. To ensure everything goes well and to execute a successful transaction, preparation is essential. At what price should the house be sold? Is it above market value? Is it a fair price?

1. How to Determine the Price of a Home

2. Knowing if a House Price Is Fair: The Market Behavior

3. Knowing the Price of a Property by Appraisal

4. PER Housing 2023

5. Tools to Determine the Price of a Home

6. What Happens if I Buy a Home Below Its Value?

7. How Much Will Housing Increase in 2023?

How to Determine the Price of a Home
The sale price of an apartment is influenced by various factors—let’s call them internal—that affect the property itself. For example, location, features, facilities, size, and condition of the property. But it also depends on external factors, such as previous real estate transactions in the area, the average price per square meter in the neighborhood, etc.

To determine whether the apartment you are buying or selling is priced appropriately or, conversely, is too high or low, it is best to compare the property with other similar ones for sale in the area. The house should be compared to others with similar characteristics, focusing on square meters or type. This preliminary analysis is crucial to know if a house’s price is appropriate.

If you are unsure whether you are buying cheaply or expensively, you can also ask a real estate agency for help or perform a comparative analysis of the property in question with similar ones. For instance, you can use Idealista to filter properties in the desired location and compare characteristics or analyze the price range.

Knowing if a House Price Is Fair: The Market Behavior
Another useful method to determine if a property’s price is right is to know the average price of homes for sale in Spain and the different autonomous communities. Additionally, it’s helpful to understand how the market is behaving, whether housing prices are rising or falling, etc.

Idealista publishes a monthly report, “Evolution of Housing Prices in Spain,” which compiles the average prices of properties in various communities, provinces, cities, and districts across the country.

According to the latest report, the average price per square meter in Spain in January 2023 was 1,922 euros, 5.4% more than in the same month of 2022.

Knowing the Price of a Property by Appraisal
One of the best ways to know the fair selling price of a property is through an appraisal. An appraisal is carried out by a qualified technician who examines the property in person. If you wonder what factors are considered in an appraisal, it should be noted that factors such as location, layout, access routes, public services, and condition are taken into account to determine the price. Other important aspects to assess include the built and usable area or facilities (pool, elevator, etc.).

PER Housing 2023
Another method used to determine if a house or apartment is expensive or cheap is the PER (Price Earnings Ratio). Investors typically use the PER to know if a company is valued at an attractive price. If the result of the calculation is less than 15, it is considered attractive, while if it is more than 20, it is considered high.

Regarding housing, the PER calculation is used to assess the property’s sale price and know the profitability that could be obtained if rented out. To do this, the sale price is divided by the annual rent. For example, if an apartment sells for 200,000 euros and can be rented for 1,500 euros per month (18,000 euros annually), the PER would be 11.1. This means it would take just over 11 years to recover the investment.

Tools to Determine the Price of a Home
Considering the cadastral value and market value is key to knowing the estimated price of a property. Usually, you should try to sell above the cadastral value, as this only considers objective values, so the market value will be higher (the cadastral value is recommended to be 50% of the market value).

The market value takes into account temporary factors such as demand, area, or economic situation. To sell a house more profitably, you should always consider this last one.

What Happens if I Buy a Home Below Its Value?
Buying a home below its cadastral and market value can negatively impact the buyer and owner regarding the payment of the Transfer Tax (ITP). By paying less than its real value, the tax authority can claim the portion of the tax due and charge interest in case of delays.

How Much Will Housing Increase in 2023?
According to several real estate experts, 2023 and 2024 are years when housing prices may start to drop, with declines of up to 10% in some markets. However, this situation will not be uniform, and some areas may not be affected.