SPANISH PROPERTY MARKET BOOMS!
The Spanish property market has bounced back.
The Spanish real estate market, despite the dramatic impact of the Covid pandemic, is officially back, according to data from the Association of Spanish Notaries.
Despite the travel bans, general fear in the sector and a three-month national lockdown between the 15th of March and 21st of June, there were 490,113 home sales
in the year. Although that represents a decline of 15% compared to 2019, it is positive news.
Back in 2008, during the worldwide credit crunch, sales of Spanish homes fell much more, 34% in fact. So, it is now clear that the pandemic has done less damage to the Spanish market than the bursting of the property bubble all those years ago.
Looking at monthly sales from the start of 2020 to May 2021, we get a clear idea of the trends in the market.
In 2021 transactions increased dramatically in Spain. In April and May, there were increases of 234% and 125% year on year respectively compared to the same months of 2020.
The trend is even better when you see that property sales in Spain were up 8% compared to 2019. Sales in Spanish property were also up 6% compared to 2018.
The market data published so far in 2021 from the public notaries, INE and local estate agents points towards a sustained recovery in Spanish property sales.
It is true that we are completing deals that were arranged pre-pandemic, but there are new buyers on the market too. We had received a large uptick in the numbers of buyers enquiries, but to see it in real numbers across the country is encouraging.
The recovery is looking stronger than anyone could have predicted, even the most positive of estate agents, in the first half of 2020.
Similar to trends across the world, top-level, high-end property is in even bigger demand here. We’ve sold villas for 250,000 all the way to 760,000 in the past three weeks. Many British buyers blame Brexit and the Pandemic for their bringing forward their plans to buy property in Spain. Retirement, independent working and investment are, as you’d expect, the main reason for the interest from the UK.
The coronavirus has established a clear preference for less stress and more leisure, especially with our wealthy clients. Spain has one of the best climates in Europe, a low cost of living, high quality of life, and a good stock of property. Spain is once again perfectly placed to benefit from this buying trend. Clarity on the travel restrictions especially from Britain which continue to ease in parallel with the vaccination rollout all help stability.
Who is buying property in Spain in 2021?
Foreign buyers of Spanish property represented 13% of the market in 2018, according to figures from the Association of Spanish Land Registrars. Due to the Covid issues, this figure fell to 11% in 2020. That was still around 50,000 deals for ex-pats in Spain.
With foreign demand already back to 83% of its pre-covid level in the first half of 2021, it is predicted, we’ll surpass the pre-Covid numbers very quickly. Clients also needed to see what the Brexit situation would mean to them; again now there is clarity and many people have decided now is the time to make the move to Spain.
The breakdown of foreign buyers according to the National statistics institute is;
UK 12 . 5%
FRANCE 8 . 4%
GERMANY 7 . 3%
BELGIUM 6 . 6%
ITALY 5 . 0%
SWEDEN 4 . 9%
NETHERLANDS 3 . 1%
RUSSIA 2 . 3%
CHINA 2 . 1%
MORTGAGE LENDING IN SPAIN
Year-on-year increases of more than 100% in April and May are inaccurate, considering the Covid pandemic.
This is the key takeaway: New residential mortgage lending in March 2021 was the highest it has been in a decade (31,839 new loans). Lending in April of 2021 was higher by 2% than the pre-pandemic benchmark year of 2019.
Real estate investing is traditionally seen as a safe, nonvolatile asset. Maybe Spain is particularly attractive to investors in times of increased uncertainty like what the Brexit and Covid situations introduced.
The extraordinarily low cost of mortgage borrowing in Spain and a lack of yield-bearing investment alternatives move the needle too. Clients are borrowing to invest in the new Equity Release in Spain, sector too.
What about Spanish property prices?
Every agent you speak to these days in Spain says that property prices are on the up.
Our associates talk of a decline over lockdown by around 5% to 6% before starting to recover.
The very latest figures from agents and the notaries in Spain show asking prices up by 10% in June 2021. This is big. It is in fact the highest number on record.
The current rise in asking prices suggests that vendors have noticed an increase in demand and property is selling, fast.
New build property in Spain.
In 2008 the Spanish housing bubble had an important effect on the new build property industry. There is still a glut of 450,000 never sold-homes in areas of little or no demand. Areas such as Alicante, Barcelona, Madrid, are now suffering a shortage of new homes for sale. Scandinavians in particular, but also the Belgian and some British buyers only want the new style property, and the demand is outstripping the completions.
In 2020 Covid reduced new build housing starts by 21%. The latest figures point towards a slight recovery in new home building this year.
We see a large increase in transactions around the Alicante/Orihuela Costa areas these days. It is comforting however to realise it is not just us. Spanish property sales are booming. The Association of Spanish Notaries backs up what we are seeing.
A boom in property in Spain is exactly the tonic we need right now. Are you thinking of starting your search? If so, why not get in touch, see what deals we can offer and begin the journey now!