What’s new in Spain’s 2023 Real Estate market
Find out about the latest news and trends in the Spanish Real Estate market. Recovery has been faster than expected and there are some emerging new trends.
Since the beginning of 2023, it seems like the Spanish real estate market is making a full comeback to pre-covid levels and it’s gaining its health back. As the National Institute of Statistics states, 2021 showed the best figures in property sales in the last 14 years. According to Forbes, it will keep growing at the same dynamic pace it already started in 2021 and it will avoid real estate bubbles, which is good news.
Keep reading to get a good glimpse of the main Spanish real estate news and trends for 2023:
Foreign buyers are coming back
According to Idealista, foreign sales are back to pre-pandemic levels. These are the most interesting insights in regards to foreign transactions:
- 63,934 property transactions were carried out in the second half of 2021, 49,1% more than in the second half of the year of the pandemic in 2020.
- 18% of all property sales and purchases were foreign.
- Prices hit a record average of 2,500 euros/m2 in foreign sales.
- Regions with the highest number of foreign sales since 2021 are Balearic Islands (81%), Canary Islands (57%), Andalusia (55%), Cantabria (50%) and Community of Valencia (44%).
- UK and German nationals seem to be the top buyers in Spain’s real estate market.
Intense demand among national buyers
The real estate industry in Spain was more active than expected during 2022 and 2023, besides the climate of uncertainty provoked by the pandemic and the worsening of international relations in the latest months.
However, it seems like the Spanish population is now coming out to hunt for what they really want. And they seem to have more money for it.
High saving levels among Spaniards
Being forced to be at home, whether demanded by the government or the fear of the virus, has resulted in less consumption and more savings. Although Spaniards are known for having a big social life, many establishments such as bars and restaurants shut down and customers did not feel comfortable getting into situations where they could be exposed to sickness.
Now that things have been slowly clearing out and activity has been brought back, there is a strong group of national buyers with an important amount of savings to invest into better property. According to Engels and Volkers, savings in Spain increased to 75,000 million euro.
Financing costs are at a record low
Together with people’s savings, property buying behavior has been supported by the fact that financing is better than ever. Although banks are pickier to approve mortgages, financing options are at a record low, with fixed mortgage rates being at the lowest.
Spanish people are looking for better homes
After going through confinement and social restrictions, there is more demand among the Spanish population for bigger homes and especially those with outdoor spaces.
An important part of the city center population in places like Madrid have opted to move out of the inner city circle in exchange for better quality of life, in greener areas, and more living space. As Emiliano Bermúdez, deputy general manager of Donpiso, explains “before, people mainly searched in cheaper areas, whereas now they are more focused on a property having better features”.
Demand for second homes is growing
The demand for second homes has increased by 50% since mid-February, according to real estate experts, and it seems this figure will continue to increase in 2023.
This trend has intensified especially in coastal areas, coinciding with the revival of the tourism industry, marked especially by the reopening of hotels and the general population starting to travel again.
Demand for second homes in Spain seems to concentrate in the Costa Blanca area, and the profile of buyers is that of people between 55-65 years of age, who usually look for 30% or 40% of financing to add to their savings.
As far as the type of foreign buyers investing in Spanish second property, UK citizens top the list, their focus being mainly on Costa del Sol, while Germans seem to prefer Andalusia and French buyers are traditionally loyal to areas like Costa Brava in Catalonia.
Commercial and office spaces are in demand
The economic recovery of the country has marked a mass reopening of many businesses, especially in the restaurant scene, but also commerce in general, which means there is a renewed demand for retail spaces.
In addition, many company employees are now back to working semi or full time in office buildings, which has ignited an increased request for office spaces. Companies are looking for better spaces for their employees.
Newly built real estate is high demand, and prices are higher
Demand for new construction in Spain is growing high and so are its prices. The main reason is the growing gap between supply and demand.
There will only be an estimated 145,000 new homes to be built in 2023, which is really insufficient considering how much demand there is for newly built homes. As Gonzalo Bernandos, director of the Master program at University of Barcelona explained in Forbes magazine, this is one of Spain’s biggest difficulties within the current real estate scene.
The main reasons for the high demand in newly built homes seem to be:
- During the hard confinement, many people in Spain started looking for better places.
- Buyers are attracted by the location of new construction. It is being built in big green areas outside of the city center in big cities like Madrid and Barcelona.
- New homes come with energy efficient features like solar panels and floor heating, so it´s much easier to save on utility bills.
- You can personalize important home features like floors, walls, and other fixtures.
Prices are going up fast in big cities
In some big cities like Madrid there was a big increase in prices in 2021, marked by double digit figures. As Engel & Volkers reports, the properties they sold in the capital city during last year were 12% more expensive, going up to 4,923 euro per square meter.
Engel & Volkers has also manifested that foreigners are coming back to big cities, since rentals to non-residents have increased by 40%.
How the Ukraine conflict will affect real estate in Spain
Many experts agree that the conflict in Ukraine and the following sanctions on Russia will make the real estate market slow down, with demand for residential homes slowly decreasing.
There is a consensus that this will avoid a real estate bubble in the coming years, since prices will stop increasing and there will be fewer sales. According to Bernardos, “a smaller increase of prices and sales, together with a faster increase of interest rates as referenced by the European Central Bank will lead to a longer period of expansion if inflation goes back to its usual level”
New models for second homes ownership
The need for people to access better homes has created a need for new types of home ownership. Especially when it comes to second home ownership in Spain, the fractional model is especially attractive and makes a lot of sense:
- You can access really good properties for only a fraction of the cost
- Homes are purchased through an established LLC with full ownership to each buyer.
- Groups usually consist of a maximum of 8 buyers.
- Each fraction gives each owner 6 full weeks of use during the year.
- Maintenance costs are split among owners, which makes second home ownership especially cost-effective.
At VIVLA, you can enjoy the above mentioned benefits and much more. Our exclusive homes are quality certified by the best experts in the market. In addition, each home is fully managed so you don’t have to worry about anything at all: you just enjoy each stay.
Do not hesitate to contact VIVLA to find out how you can own part of an exclusive second home at some of Spain’s finest destinations in an easy, sustainable and flexible way.