Spain is coming out of recession at a fast pace, much faster than after 2008. The situation is quite rosy, but not perfect. Check out he key conclusions from the BNP Paribas Bank report.
Activity Peak
Spanish residential real estate market sank in 2020 as the result of restrictive measures to combat Covid-19. But the way out of the recession turned out to be swift.
In 2021, 670,000 real estate transactions were concluded in the country – the biggest amount since 2007!
According to the National Institute of Statistics (INE), housing prices in 2021 increased by 3.7%. The growth has been going on for six years: from 2015 to 2020, a Spanish square meters rose in price by an average of 4.9% per year.
Despite this, the cost of housing in the kingdom is still 10% below the peak of 2007.
However, inflation has increased in recent months. According to the analytical company Tinsa, in the first quarter of 2022, real estate prices increased – year-on–year - by 6.8%.
Price growth and increase in residential real estate transactions, 2007-2022
Source: National Institute of Statistics (INE)
Of course, the price growth rate depends on the region.
So, in Madrid, popular tourist destinations, as well as in densely populated locations (Balearic Islands, Melilla, Ceuta), real estate in 2021 rose in price at the fastest pace in six years, and prices in some locations have already exceeded the level of 2007-2008.
Conversely, in rural and sparsely populated regions (Extremadura, Castile and Leon, Navarre, Aragon) prices are still 20% lower than 15 years ago. But they will probably start to grow, as the number of transactions increases.
Lack of Offers
Several factors contribute to the market growth in Spain:
economic recovery after the recession during the pandemic,
higher household savings,
employment growth,
low loan rates.
But the number of offers cannot meet the high demand. At the same time, the number of construction permits issued has sharply decreased since 2007 and cannot turn back to normal in any way.
Number of construction permits issued, 1992-2022
Source: National Institute of Statistics (INE)
The imbalance between supply and demand is only increasing every year, and the shortage in the market is felt more and more acutely.
In the nearest future, real estate will most likelycontinue to grow due to the increase in the construction costs.
Speaking of Loans
So, prices in Spain have exceeded the level of 2008 somewhere, and somewhere they are approaching it. But the market situation is completely different.
During the previous price increase (from 2000 to 2008), household debt doubled from 65% of total family income to a peak of 135% in 2008.
Since 2020, the level of debt has started to grow again, but not for long. In 2021, the indicator began to decline.
Household debt in Europe, 2010-2021
Source: National Institute of Statistics (INE)
At the same time, a sharp decline in interest rates helped to reduce the cost of servicing loans, which fell from 11.4% of total household income in 2008 to 6.2% in the fall of 2021.
In addition, the financing products themselves have changed. Floating-rate loans displaced fixed-rate loans, which accounted for 70% of the total outstanding loans in January 2022.
Home buyers took advantage of the moment to fix the terms of loans on more favorable terms.
Thus, the risks when buying real estate in Spain are currently much less than during the previous economic cycle.
Inequality
However, the rise in housing prices also causes certain social consequences. In particular, it increases the inequality between those who already own real estate (their capital increases in accordance with rising prices) and new buyers.
Buying a home requires a financial effort, while the families income iis not growing as fast as real estate prices.
Record low interest rates have partially helped to compensate for this imbalance, but the disproportionality of the debt burden and income may soon worsen, exceeding the peak figures of 2007.
These trends are more noticeable in large cities and coastal areas, where most of the population lives.
As a result, the demand for rental housing and its share in the total base of residential real estate has increased, followed by increased rental rates.
This led to an increase in the interest of private investors in projects under construction for subsequent rental, which, in turn, increased the demand for housing and price growth.
Propreties for sale in Spain:
320 000 €
House on Costa Daurada, Spain
273 sq.m
Spain
Costa Dorada
G.Segur de Calafel
House with elevator and barbecue area
Cozy house in a quiet residential area 1.4 km from the beach in Segur de Calafel,
Costa Dorada.
Land area: 411m2
The house has an area of 273m2: 4 bedrooms (one of the bedrooms has an individual bathroom and a dressing room), 2 bathrooms, a living room, a...
INDOM
2 650 000 €
Villa in Benidorm, Spain
575 sq.m543
Introducing a luxury villa with breathtaking panoramic views that only successful people and business leaders can afford! The bright pearl of the north coast is guaranteed to bring you the most stunning and seductive sunset! Luxurious coastline, shimmering water surface, magnificent mountains, all this you can admire from your own royal terrace....
SPAINLUXINVEST
159 500 €
Flat on Costa Blanca, Spain
63 sq.m222
Ground floor bungalow in Los Balconies, Torrevieja. Living room, open semi-equipped kitchen, 2 bedrooms, 2 bathrooms, terrace and a private garden of 20 m2. The total area is 83 m2. On the territory there are 2 communal swimming pools for adults and children, a green area. The complex is equipped with underground Parking and storage rooms for...
ESTATE BARCELONA
174 000 €
Flat on Costa Blanca, Spain
83 sq.m222
Ground floor apartment in La Zenia, Orihuela Costa. Living room, open kitchen, 2 bedrooms, 2 bathrooms, terrace of 45 m2. The total area is 83 m2. The complex has underground parking, green areas, a communal swimming pool and a gym.The complex is located next to the commercial center "Zenia Boulevard". Ideal conditions for both recreation and...
ESTATE BARCELONA
1 575 000 €
House on Costa del Sol, Spain
323 sq.m444
Residence
Lovely family home in the prestigious area of New Andalusia, Marbella. The house has 4 bedrooms and 4 bathrooms, an equipped kitchen, a spacious living room with a fireplace and access to the terrace. Beautiful view of La Concha mountain. On the ground floor there is a garage for 3 cars, a utility room and a technical room. The house has an...
ESTATE BARCELONA
459 000 €
House on Costa Blanca, Spain
175 sq.m42
Beautiful villa located in Aguas Nuevas, Torrevieja, only 1,5 km from the sea. It is distributed on two floors, and consists of 4 bedrooms, 2 bathrooms, 1 toilet, a spacious living room and separate kitchen. The villa of 175 m2 is recently refurbished and its orientation is Southeast. The plot of the villa is 500 m2, in which we find a parking...
Mercury Group
264 900 €
Flat in San Miguel de Salinas, Spain
67 sq.m322
Online ViewingRemote TransactionCredit
New Build residential of 165 apartments of 2 and 3 bedrooms, distributed over 7 floors.
Fully enclosed residential with communal swimming pools for adults and children, green areas, playground for children and an area for adults with bio-healthy circuit, located on the Costa Blanca in San Miguel de Salinas near golf courses, beach and shopping...
Planeta Spain
1 800 000 €
Villa in Lloret de Mar, Spain
350 sq.m663
Exclusive property with private pool and wonderful sea views in Cala Canyelles, Lloret de Mar
This exclusive property is a house of about 350 m2 and a large plot of about 1210 m2.
The house has a lot of personality, with rustic details, tastefully decorated with stone and parquet floors, wooden beams, fireplace and views through a large...
Sale and Rental Spain
849 000 €
House in Gava Mar, Spain
270 sq.m44
A three-level, beautiful house with a swimming pool, located in the prestigious suburb of Barcelona - Gava Mar. House area: 270m2 Number of bedrooms: 4 bedrooms Number of bathrooms: 4 Swimming pool Distance from the sea: 3 minutes on foot Land area: 300 m2
Alisa Estejt
875 000 €
House on Costa Blanca, Spain
140 sq.m32
Residence
Modern single storey villas with optional basement or garage with 3 bedrooms and 2 bathrooms in Orihuela Costa golfted in a quiet area and surrounded by Mediterranean forest. Southwest facing with open views. Built to the highest quality with many special features and delivered with fully fitted kitchen including all white goods as well as air...
We offer you a real estate option that is ideal both as an investment and as an excellent place of residence. Functional design and architecture are perfectly combined and meet the quality standard not only in building materials, but also in decoration. Rational layout, interesting interior design and high functionality of the living space have...
We present modern apartments in the Residencial Kasia V complex in Torrevieja. The apartment is located on the ground floor, consists of three bedrooms, two bathrooms, a living room combined with a kitchen, a terrace of 9.80 sq.m. and a patio. The area of the apartment is 64.40 sq. m. The price includes: fully equipped bathrooms, fitted...
EspanaTour
890 000 €
Villa in Benissa, Spain
250 sq.m332
ResidenceOnline ViewingRemote Transaction
Elegant Standalone House in Benissa Alicante
The sophisticated house project is situated in the charming municipality of Benissa, within the northern reaches of the Alicante province. This locale is an integral part of the renowned Costa Blanca, celebrated for its captivating beaches, breathtaking landscapes, and temperate climate.
Benissa, a...
TEKCE
330 000 €
Apartment in Benidorm, Spain
68 sq.m211
Online ViewingRemote Transaction
Sea-View Apartments Close to the Beach in Benidorm, Alicante in the Costa Blanca Region
Situated in Benidorm, a coastal municipality within the Alicante province, the apartments for sale are part of the renowned Costa Blanca region. The area offers picturesque beaches and a favorable climate that graces most of the year.
Benidorm is famed for...
TEKCE
385 000 €
Penthouse in Fuengirola, Spain
84 sq.m322
Online ViewingRemote Transaction
2 Bedroom Apartments in a Newly-Build Residential Complex in Los Pacos Fuengirola Málaga
This new residential project is situated in Fuengirola, a vibrant seaside town nestled between Malaga and Marbella. The town enjoys a privileged sub-tropical Mediterranean climate, with hot summers and warm winters. It is considered to be one of the most...
TEKCE
403 000 €
Villa in Mijas, Spain
134 sq.m432
Online ViewingRemote Transaction
Sea View Semi-Detached Houses in Mijas Malaga
The chic houses are in a modern-design project in Mijas, Malaga. Mijas is a charming destination with its 12 km seashore, beautiful climate, and prestigious residential areas including Riviera del Sol and Sitio de Calahonda. It gets attention to be both an ideal place to settle and holiday.
Houses...
TEKCE
929 305 €
House on Costa Blanca, Spain
315 sq.m33
Residence
These incredible villas have been designed with a new concept and exceptional details, making them truly villa features a spacious living-dining area with an open kitchen, three or four bedrooms, and three bathrooms. Additionally, they include a storage room, a solarium, and an expansive garden with multiple terraces. Outside, you can enjoy your...
Mercury Group
475 000 €
Penthouse in Denia, Spain
81 sq.m432
Online ViewingRemote Transaction
1, 2, 3 Bedroom Apartments with Large Terraces Surrounded by Nature in Denia Costa Blanca
Luxurious modern apartments situated in Denia a coastal town located on the Costa Blanca in the province of Alicante, Spain. It is known for its historic castle, beautiful beaches, and a pleasant Mediterranean climate. Denia enjoys a Mediterranean climate...
A new residential complex on the Costa Blanca in a quiet residential area of Balcony de Finestrat with good transport links, next to the Puig Campana golf course and less than 10 minutes drive from Finestrat Bay and the sandy beaches of Benidorm.
Adjacent villas and detached villas in the second phase of a modern complex with stunning views of...
The Spanish government has developed a bill "On the right to housing" (Ley por el Derecho a Vivienda), which is currently being discussed in Parliament. A set of new measures should regulate various areas of the market: improve access to housing, establish control over the eviction of tenants, increase the volume of social housing, regulate control over rent increases, etc.
According to experts, although these measures are steps in the right direction, they will only partially help with the main problem – the lack of new construction projects in some regions of the country.
Conclusion
There are currently no serious threats in the residential real estate market in Spain. But rising prices and reduced supply in densely populated areas affect stability and put pressure on the purchasing power of customers.
