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The Spanish Market Current State

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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

rate INE
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

rate INE
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

rate INE
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:
Villa for 2 950 000 euro in Javea, Spain
2 950 000 €
Villa in Javea, Spain
6 5 6
Residence Online Viewing Remote Transaction Credit 3-4%
Exclusive Designer Villa overlooking the Port of Javea. This property consists of bedrooms with bathrooms sitting on a plot .Our luxurious villa sits on a great plot in an exclusive cul de sac. Its desirable south facing location sitting above the Port of Javea has the most stunning views of the bay of Javea. We have received the license and...
SPAINLUXINVEST
Apartment for 119 000 euro in Torrevieja, Spain
119 000 €
Apartment in Torrevieja, Spain
67 sq.m 2 1
Credit
A complex of 137 apartments in the center of Torrevieja, just 10 minutes from El Cura Beach. Ready-made turnkey apartments for sale: - 2 bedrooms and 1 bathroom; - total area of 67 m2; - double glazing; - equipped bathroom; - equipped and furnished kitchen; - on-site: swimming pool and green areas; - developed infrastructure of the city. This...
Expertagent
Chalet for 348 000 euro on Costa Calida, Spain
348 000 €
Chalet on Costa Calida, Spain
155 sq.m 4 3 2
New high-quality villas in a modern style with private pools. Just 400 meters from the beaches of Mar Menor. The villas have 3 bedrooms and 2 bathrooms, a large open living room, a separate kitchen, a garden and a storage room for bicycles.  High quality and design in a modern eco-house. Mar de Crystal is a beautiful area on the coast of Mar...
Albamar Group
Flat for 240 000 euro in Javea, Spain
240 000 €
Flat in Javea, Spain
88 sq.m 3 2 2
Credit from 2.8%
New construction a few minutes from the beach consists of 58 homes with 2, 3 and 4 bedrooms distributed on the ground floor with a garden. Includes penthouse homes, and duplexes with large terraces. In addition, all the houses will have a garage and storage room. Equipped kitchen: induction hob, extractor hood, oven and microwave, compact...
SOLANASPAIN
Bungalow for 410 000 euro in Gran Alacant, Spain
410 000 €
Bungalow in Gran Alacant, Spain
212 sq.m 4 3 2
Residence Online Viewing Credit 3-4.5%
We offer you a new complex on the first line of the sea near el Carabassí beach in Gran Alacant. These places impress with their unique ecosystem of dunes and pine forests. Nearby is the Clot de Galvany Nature Reserve, which has preserved its pristine natural treasure. Carabassi Beach is just a 5-minute walk away. It is known for being one of...
EspanaTour
Apartment for 457 000 euro in Benidorm, Spain
457 000 €
Apartment in Benidorm, Spain
113 sq.m 3 2 2
Residence Online Viewing Remote Transaction Credit 3-4.5%
We present a premium residential complex in the city of Benidorm. Benidorm is the most cosmopolitan city in Spain, which attracts not only tourists from all over the world, but also residents of other regions of Spain with its unique microclimate – the mildest on the entire Mediterranean coast of the country. This city is considered one of the...
EspanaTour
Flat for 138 000 euro on Costa Blanca, Spain
138 000 €
Flat on Costa Blanca, Spain
75 sq.m 2 2 2
Apartment in La Marina, Alicante. Living room, separate kitchen, 2 bedrooms, 2 bathrooms, terrace of 9 m2. The total area is 75 m2. The complex has underground parking, a garden and a communal swimming pool. The town of La Marina is located between Guardamar and Santa Paula. It is conditionally divided into two parts – the old (coastal) and the...
ESTATE BARCELONA
Flat for 149 900 euro on Costa Blanca, Spain
149 900 €
Flat on Costa Blanca, Spain
101 sq.m 2 2 2
Apartment for sale located in the heart of the prestigious golf course of Campoamor, Orihuela Costa. The property consists of 2 bedrooms,2 bathrooms,and kitchen. Balcony of 11m2 with panoramic of the pool. The residential has a communal pool and gardens. It is oriented southoamor Golf is conveniently situated in a unique environment south of...
ESTATE BARCELONA
Apartment for 207 000 euro in Madrid, Spain
207 000 €
Apartment in Madrid, Spain
35 sq.m 2 1 1
Bright one-bedroom apartment for sale in the prestigious Trafalgar district, Chamberí, 3 minutes walk to Iglesia metro station. The area is 35 m2, there is 1 bedroom, 1 bathroom. The apartment is located on the 1st floor according to the Spanish system (2nd floor in Russian). There is no elevator in the building, but its installation is...
Albamar Group
Villa for 2 300 000 euro in Benidorm, Spain
2 300 000 €
Villa in Benidorm, Spain
429 sq.m 4
Residence
The villa is located in the prestigious protected urbanization of Sierra Cortina, in the suburbs of Benidorm, on the Costa Blanca. The villa has an area of 429 sq. m. The apartment includes a spacious living room, a kitchen equipped with Miele appliances, 4 bedrooms and bathrooms equipped with Laufen plumbing. The villa is made of high-quality...
Knight Frank
Villa for 7 400 000 euro in Andrach, Spain
7 400 000 €
Villa in Andrach, Spain
805 sq.m 7 8
Residence
This great villa is located in an exclusive position in a tranquil area on the La Mola peninsula in Puerto de Andratx and enjoys fantastic sea views and a lot of daylight until the sun sets in the sea. The classic Mediterranean-style villa has 4 bedrooms, 3 of them with bathroom en suite. There are also 2 guest apartments, each with a bathroom...
First Mallorca
Bungalow for 346 000 euro in Spain
346 000 €
Bungalow in Spain
195 sq.m 3 2
This residential complex nestled into the Los Nardos beach comprises villas with gardens or solariums classified into Premium and Standard categories. The estate pays tribute to nature thanks to its communal areas with dense vegetation beautifying the footpaths, which are ideal for jogging. There is a long artificial stream that crosses the...
TM Real Estate Group
Apartment for 495 000 euro in Spain
495 000 €
Apartment in Spain
58 sq.m 2 1
Beautiful newly renovated seafront apartment in Colonia de San Jordi. The apartment with spectacular sea views offers the following premises: two bedrooms, a bathroom, a living room with a bright open kitchen and a beautiful sea view terrace. Features include double glazed windows, aluminum shutters, hot/cold air conditioning, fully fitted...
First Mallorca
Flat for 74 900 euro in Torrevieja, Spain
74 900 €
Flat in Torrevieja, Spain
66 sq.m 3 2 1
Online Viewing Remote Transaction Credit
Apartment in the central area of ​​Torrevieja, just 650 meters from Playa del Cura beach. It consists of a living room, two bedrooms, an American kitchen, a bathroom and a terrace. The property is in a perfect condition and is located in a central area, with all the necessary services nearby (shops, banks, hotels, school, health center, etc.),...
Planeta Spain
Apartment for 160 000 euro in Rojales, Spain
160 000 €
Apartment in Rojales, Spain
80 sq.m 3 2 2
Beautiful two-storey townhouse in a beautiful gated urbanization Albamar, in Mediterranean style.Fully equipped with everything necessary for a comfortable stay. On the ground floor there is a living room, a bedroom, a kitchen and a toilet.On the second floor there are two bedrooms and a bathroom with a bathtub.Air conditioning, internet, TV,...
Albamar Group
Apartment for 490 000 euro in Campos, Spain
490 000 €
Apartment in Campos, Spain
94 sq.m 2 2
This newly built complex is being built in the immediate vicinity of Es Trenc beach. The entire facility will be built in a climate-friendly passive house style. Renewable energies and good insulation performance are the top priority here. The apartments themselves will not be built in one big block, but in the form of several small houses,...
First Mallorca
Villa for 950 000 euro in Barcelona, Spain
950 000 €
Villa in Barcelona, Spain
463 sq.m 6 5
Residence
Incredible modern house for sale in Vilassar de Dalte, ideal for year-round living. Distances to: five minutes by car to the beach, twenty minutes from the center of Barcelona. The house is two-storey plus a basement,its area is 463 m2. On the ground floor there is a spacious living-dining room with access to a large terrace, a fully...
Hayat Estate
Villa for 1 170 000 euro in Estepona, Spain
1 170 000 €
Villa in Estepona, Spain
400 sq.m 4
Residence
Object number on the housage: 345615.
HOUSAGE
Bungalow for 162 000 euro in Spain
162 000 €
Bungalow in Spain
87 sq.m 2 1
Los Narcisos apartments are located within a short walking distance of Playa Los Nardos y Playa La Entrevista, on the Almería coast, close to the municipality of Águilas and Vera. It is a complex designed to offer large interior spaces, with beautiful gardens and squares that include a large swimming pool area with Jacuzzi, bordered by a large...
TM Real Estate Group
Bungalow for 199 000 euro in Spain
199 000 €
Bungalow in Spain
136 sq.m 2 1
Los Narcisos apartments are located within a short walking distance of Playa Los Nardos y Playa La Entrevista, on the Almería coast, close to the municipality of Águilas and Vera. It is a complex designed to offer large interior spaces, with beautiful gardens and squares that include a large swimming pool area with Jacuzzi, bordered by a large...
TM Real Estate Group

Lack of New Development

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.

Source: BNP Paribas
Photo: unsplash.com (Raimond Klavins)

Quoting conditions of Prian.info materials

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