Following easing the Covid-19 pandemic restrictions, the Spanish property market has staged a remarkable recovery. There are still concerns due to the fragility of the Spanish economy; still, it seems Europeans can’t get enough of Spanish properties.
Property prices have been increasing steadily since the credit crash in 2008. The Spanish National Institute of Statistics published a study for January 2022, which reported an incredible 52,684 property transactions were completed. This figure is the highest since 2008. The February figures were slightly higher at 53,623 transactions, a whopping 24% annual increase. Of these February sales, 79.6% were used properties, and 20.4% were new builds.
El Mundo, a respected Spanish newspaper, highlighted that demand for homes in Spain continues to outstrip the supply. This has led to a decline in available properties, with housing stock falling by 17% in the past year.
The knock-on effects of travel restrictions from lockdown and the cessation of building projects have caused a backlog of purchasers, and construction industries cannot fill the void.
This same situation is also being seen across Europe in several other countries. In the pandemic year, sales by foreign residents fell over 22%. Many property experts claim Spain will see 750,000 property sales in 2022 and predict an average growth in price of over 10%.
Most of this new growth has come from single-family homes rather than apartments, with houses selling 3 to 1 against apartments.
The change, driven by lockdown, is for more significant properties in the suburbs or by the coast rather than city centres.
City centre apartments are currently out of fashion as buyers search for safe outdoor space. We can all remember images of people in apartments with no outdoor space during the lockdown.
The national averages, though, don’t tell the whole story. The regions have a vast disparity in growth, with the old favourites leading the pack, Balearics, Canaries, Andalucia, Valencia, Catalunia and Murcia.
Last year the Balearics roared away in the property market with sales up 51%; the other regions, at over 40% growth, were hot on their heels.
As far as prices are concerned, the Balearics win again, with prices rising over 14%. Interestingly prices have not fallen in any region popular with foreign buyers.
Several factors are driving the property boom.
Lockdown built pent-up demand for holidays and a new way of thinking with work-life balance. Work from home has now opened up possibilities for Europeans to work from other countries, and why not choose Spain for this? With the Euribor rate in minus figures, mortgages are cheap to obtain and service.
Many people saved money in lockdown due to cancelled holidays. The loss of entertainment opportunities such as restaurants and theatres meant there was nowhere to spend money. Car ownership has plummeted, with work from home being prevalent. All of these factors and house price rises in the UK and other European countries mean re-mortgage finance is a cheap and easily available method to raise capital from an existing property.