Has the construction of new buildings in Spain stopped because of COVID-19?

New buildings are unmatched in popularity in Spain’s real estate market in 2021. After the lockdown, Spaniards began looking for housing that best suited their new needs of spaciousness and being away from noisy cities.

How will the primary real estate market change in 2022? Can the coronavirus stop the construction of new residential complexes? What problems does the Spanish construction sector face? Let's consider these and other questions below.

Content:

• The primary real estate market
• Changing interests
• Price increases
• Average prices of new real estate in Spain, January 2022
• Problems in the Spanish construction industry
• Forecasts for 2022
• We’ll help you buy an apartment in a new building in Spain

The primary real estate market

After the first 3 months of the pandemic, all areas of activity were in a state of uncertainty but the pace of construction in Spain during the coronavirus was restored. So, in 2020, the demand for primary housing increased by 7% compared to 2019.

So much so that 2 out of 10 Spaniards chose a new property. The number of transactions from January to September 2021 increased by 42.2% compared to the same period in 2020. Mortgage loans increased by 15.1% compared to 2020.

The construction of residential complexes in Spain allows buyers to purchase beautiful real estate with many advantages like high-quality materials, a well-thought-out layout, good use of every square meter and natural light, a swimming pool, garage, etc.

Changing interests

Primary real estate was in great demand during the pandemic because its features could satisfy buyers’ new preferences of large spaces, natural lighting, green areas, energy efficiency, adaptation to various changing family needs, and peripheral location.

During the isolation, sales of secondary apartments in the center of Barcelona slowed down and the demand for primary homes in Maresme (Teia, Lavaneres, Mataroi, etc.) and the periphery of Barcelona rose.

Price increases

Developer'sprices for Spanish real estate didn’t drop because of COVID-19. On the contrary, the cost of new buildings reached 10-year record levels during the pandemic. It increased between 4-20% depending on the type of property.

In 2020 when the pandemic was in full swing, prices stabilized. Then, there was a 0.9% increase. General health improving, Spaniards saving money and historically low interest rates in the market raised costs.

Experts believe that the rise in prices shows that the real estate market is improving. In Spain, the average price per square meter in the primary market is EUR 2,551. There were various increases in all autonomous communities. For example, the growth was 1.9% in Extremadura and 4.1%. in the Balearic Islands.

Average prices of new real estate in Spain, January 2022

Barcelona is in first place in the ranking of cities with the highest price per square meter (EUR 4,630). It’s followed by Madrid (EUR 3,802) and San Sebastian (EUR 3,757). Caceres (EUR 1,222), Ciudad Real (EUR 1,228) and Badajoz (EUR 1,233) are in the last places. The price range in autonomous communities varies from EUR 1,229 per square meter in Extremadura to EUR 4,104 in Catalonia.

Problems in the Spanish construction industry

The main problems the Spanish construction industry faces are:

1. Rising costs. Despite its good performance, construction profitability has decreased by 13%. According to surveys, 86% of respondents noted that building materials rising prices was the main obstacle for the industry. In 2021, the cost of building a new project increased to 1.155 euro per square meter. This was 15.6% more than in 2020. For 82% of respondents, skilled labor shortages are also a big problem.
2. Bureaucracy. Building a new home in Spain is difficult. Administrative procedures including collecting documents, licenses and permits slow down and complicate the construction process. So, the average construction time for a new property can be from 7 to 12 years.
3. Real estate shortage. The bureaucratic difficulties that affect the real estate sector led to a large shortage of new housing. This unbalanced supply and demand and causes higher prices. Industry experts believe that Spain needs 150,000 new housing units per year. But, in 2021, almost 90,000 projects were stopped.

Forecasts for 2022

Experts say that in 2022, the Spanish construction sector can expect an increase in the number of new facilities by 49%. Non-residential and civil construction projects will also increase by about 20% and 14%, respectively. These positive factors are based on data from the last 3 months of 2021 as well as on investments by European funds in real estate in Spain in 2022.

The demand for apartments in new buildings in Spain will grow by 7-10% and remain stable, the supply will adapt to customer needs, and prices will continue to grow moderately from 2 to 5%.

2022 will be marked by an increase in social facilities. On February 1, 2022, the Cabinet of Ministers adopted a new Housing Law that obliges developers in Spain to allocate 30% of new construction projects for social real estate. Of these, 15% will be available for the most vulnerable parts of the population.

The European Central Bank predicts that financial conditions will remain optimal to purchase Spanish real estate in 2022 and so transactions won’t drop.

Cities like Madrid and Barcelona will continue experiencing a shortage of primary housing. This year, the number of purchase and sale transactions of local real estate will be about the same as 2021 (about 510,000). 110,000 transactions are also expected in the primary market this year.

We’ll help you buy an apartment in a new building in Spain

Spain-Real.Estate helps buyers choose new housing in Spain. The agency's website has a wide range of real estate projects from affordable studios and apartments, apartments in new buildings on the first line of the sea, real estate from developers, penthouses and cottages.