Date Published: 21/01/2021
ARCHIVED - Spanish property market showing resilience to the pandemic
ARCHIVED ARTICLE
Falls in sales figures and market prices are manageable as Covid alters buyer preferences
Expectations in the Spanish property market for 2021 depend, like so much else at the moment, on how the situation develops regarding the pandemic which has turned the world on its head over the last 12 months, but a general consensus appears to be emerging among most analysts that for at least the first three quarters of the year both sales figures and market prices will continue the notable but far from catastrophic downward trends which have marked most of 2020.
Given the rise in unemployment and the generalized downturn in Spain’s economic fortunes, the outlook is perhaps not as bleak as might be expected. In general terms the demand for housing is falling as more and more people find themselves out of work or at risk of becoming unemployed, and young adults particularly are finding it difficult to climb onto the first rung of the property ladder, but on the other hand the changes in lifestyle brought about by current circumstances are leading to increased interest in certain types of home.
The rise in the number of people working from home and the domestic problems this can cause are reported by estate agents across the country to be causing many individuals to look for larger properties. Clearly the attraction of an extra room and/or outdoor space has been underlined by lockdowns and restrictions on travel over the last ten months (at the same time less densely populated areas are now more in demand than a year ago), and those who make the decision to seek an upgrade in terms of living space have access to record low interest rates on mortgage loans with the Euribor currently standing at approximately -0.5 per cent and unlikely to change significantly in the near future.
Detached properties are becoming more popular
One indication of this change in buyer preferences is that the latest monthly report published by Spain’s property registrars shows that 20.4 per cent of all purchases concerned detached homes, the highest proportion since records were first compiled.
In addition, vendors are aware of the fall in demand and many are becoming far more willing to flex their original asking prices, making it possible for purchasers to achieve reductions and finance their new homes at attractive interest rates, many of them opting for fixed rate terms.
In other words, while the restrictions on international travel are likely to continue to have a significant effect on the number of purchases made by non-Spaniards, which will undoubtedly impact on some coastal areas more than others, professionals within the sector expect a significant but not drastic decrease in sales figures in the first half of 2021, coupled with a similar fall in average market prices, but are optimistic that a recovery might begin by the autumn.
After the collapse of the property sector a little over a decade ago few are predicting a similar disaster as a result of the pandemic, most people believing that while the amount of new construction will doubtless fall as promoters bide their time wherever possible, the pre-pandemic levels indicate an underlying resilience in the market.
Of course, though, much depends on the pandemic and the level of immunization achieved by the mass vaccination campaign which has just begun. The only certainty seems to be that when a degree of normality returns to life in Spain, the characteristics of the property market will be different from those which could be taken for granted until a year ago.