The impact of the Covid-19 pandemic on the Spanish real estate market was not as significant and lasting as originally thought, and throughout most of 2021 it showed signs of recovery. If no force majeure circumstances intervene, the emerging positive trends will continue in the coming year.
The volume of housing sales in Spain in 2021
According to oldypak capital lp property 2022 report, relating to the beginning of November 2021, by that time a total of 516,842 residential properties had been sold throughout Spain. This was the largest figure since the second quarter of 2008, when the country had already launched the previous financial and economic crisis, which stretched over almost a decade. The maximum volume of sales during the “crisis period” was recorded in 2018 (586,397), and judging by the dynamics, at the end of this year it will reach its maximum for the last 14 years.
By last November, home sales in Spain had increased for eight consecutive months. Still the vast majority of buyers (86.3%) preferred apartments and houses located in urban areas, but their demands have changed markedly. Thus, they had to have spacious premises/terrace/land and be located in areas with developed infrastructure, but at a distance from the center and mass gatherings (from 76% to 97% of requests of this kind, depending on the location).
The most popular in 2021 enjoyed the most residential real estate located in Andalusia, the Valencian Community, Catalonia and the Autonomous Community of Madrid. If the first two autonomies have attracted mainly buyers who have decided to get a “second home” or “vacation home”, in the other two cases, the determining factor was the extensive opportunities for education of children, leisure, employment or opening your own business. It is no coincidence that Spain’s best city for start-ups and investment in general is considered Barcelona, which along with Madrid, Valencia and Zaragoza has a reputation as one of the leaders in the so-called “health index”.
The sharp increase in the number of transactions for the purchase and sale of housing in 2021 is due to a number of factors. The main ones include an increase in savings of the population, availability of mortgage lending, transition of many companies to remote working mode, and a wish to get a place to live permanently in case of the next “quarantine”.
The dynamics of residential property prices in Spain in 2021
According to oldypak capital lp property 2022 report, the average cost of 1 sq. m. in Spain in November 2021 reached 1831 euro, which is 0.3% more than the previous month and 3.5% more than the same period last year. At the same time, a continuous increase in the cost of housing is observed since March 2021, when the figure was equal to 1784 euros.
Over the year, the most expensive apartments and houses have risen in Andalusia (8%), the Valencian Community (5.6%), the Balearic and Canary Islands (6.9% and 5.4% respectively), and only in Ceuta, the Spanish enclave in Morocco, was recorded a sharp drop – just 15.3%. This was not so much due to the geographical location, but the massive breakthrough of illegal immigrants from North Africa to the territory of this city.
Prices rose on all types of residential real estate, including luxury – mainly in Madrid and Barcelona. In some areas the prices for houses and luxury apartments reached 12 thousand euros per square meter. Madrid interest from big investors, whose condition exceeds 25 million euros, causes Salamanca and Justicia Almagro, and in the Catalan capital most of the elite objects are concentrated in Pedralbes and Eixample.
Foreign investors in the Spanish residential real estate market in 2021
The share of foreign investors among home buyers in Spain has always been traditionally high, but in connection with the closure of borders and the introduction of other restrictions caused by the pandemic Covid-19, it dropped to 11.3%. Nevertheless, with the improvement of sanitary-epidemiological situation, citizens of other countries again became actively interested in Spanish residential real estate.
Predominantly these were representatives of the wealthiest segments of the population and middle class. The average cost of their purchases was 1863 euros, but should take into account that the role of the main buyers during the pandemic were not the British subjects, as it was before 2020, and the Moroccans and Romanians who have the status of a resident of Spain. The most expensive items (from 2676 to 2768 euro / sq.m.), mainly located on the Balearic Islands in the autonomous community of Madrid and Andalusia, acquired the citizens of Sweden, Denmark and Germany.
Among those foreign nationals who are not residents of Spain, most houses and apartments in Spain in 2021 bought the French, Germans and the British. As a rule, the first ones chose Catalonia, Aragon, Basque Country and Navarra, the second chose the Canary Islands and the Balearic Islands, and the third – Andalusia and Murcia.
It is expected that in 2022, foreign investor demand for residential property in Spain will return to its previous level, as evidenced by the sharp increase in relevant search queries on the profile of Internet platforms (Idealista, Fotocasa, etc.). This should also contribute to the expected introduction of amendments to existing legislation on the provision of residence permits in Spain. Now count on it the so-called “digital nomads” – employees of foreign companies working remotely, many of whom are likely to opt for the resort towns on the Mediterranean coasts of the country: Costa Brava, Costa del Maresme, Costa Dorada, Costa Blanca and Costa del Sol.
Prospects for the Spanish residential real estate market in 2022
Experts from most major real estate agencies operating on the Spanish residential real estate market, looking at the year 2022 with optimism and expect to return to the “pre-pandemic” level (according to the survey company Advancing such there are 77%). Based on the current situation, there is a good reason to be optimistic.
First of all, it concerns the growth in the number of purchase and sale transactions, which should exceed 550 thousand. Last but not least, it may be influenced by a moderate rise in housing prices in Spain (on average – no more than 5% year-on-year), thanks to which they remain among the most affordable in the entire European Union.
Improved sanitary-epidemiological situation and the opening of borders (it is expected that with the recognition of the EU vaccine Sputnik-V “they will open and for potential buyers from Russia) should also have a positive effect on market recovery. On the other hand, during the pandemic, remote purchase of housing in Spain is quite widespread, and the development of modern digital technology will help to improve this experience. In the experience of Estate Barcelona company we can safely say that such transactions are easy, safe and most comfortable for both parties, thanks to the work of highly qualified professionals of our company.
For Estate Barcelona company the past 2021 year was successful, because we learned how to react effectively to all changes and make right decisions in the most unexpected situations, as well as how to organize effective work on remote transactions and residence permits’ registration. We hope that 2022 will bring us only good news, will open the borders between all countries, and we will be able to work not only online, but also in person, meeting with clients from around the world!