By the end of last year, the market of real estate in Spain showed signs of slowing down the growth. How are things now and what to expect from Spanish real estate this year?
Content:
- Real estate in Spain in 2022
- Spanish economy in 2022 and forecast for 2023
- Euribor (Euro Interbank Offered Rate) in 2023
- Projected property sales in 2023
- Property prices in Spain in 2023
- Investor interest in Spanish real estate in 2023
- Spanish real estate rental prices in 2023
- We will help you buy property in Spain!
Real estate in Spain in 2022
In 2022, especially at the beginning, record sales volumes were recorded along with a continuous increase in prices. The spring and summer period was especially lively. However, there were fewer transactions already in August/September. Moreover, despite inflation, the real estate market in Spain showed the best performance in a long time. The level of sales grew to numbers that had not been seen since 2007, and even a surge in mortgage rates could not dampen the frenzy in the development market.
Spanish economy in 2022 and forecast for 2023
In order to predict the situation in the current year, it is necessary to look at the overall trends in the development of the Spanish economy and the expected mortgage rates. Unlike other European countries, the economy in Spain recovered much faster after a strong recession during the pandemic in 2020. Inflation also turned out to be not as acute as in the rest of Europe, and tourism levelled off to pre-pandemic levels.
According to last year’s data, Spain’s GDP increased by 5.5% compared to 2021. In 2023, Spanish banks project a GDP growth of 1.3%. The estimated increase in 2024 is 2.7%. These figures are 0.8% and 0.9%, respectively, higher than the expected growth in the euro area as a whole.
The end of 2022 was marked by an inflation rate of 5.7%. In July, the rate reached its peak of 10.8%. The cost of living by the end of 2023 should increase by about 4.9%, which is 1.4% lower than in the euro area.
As far as tourism goes, in 2022, this sector made a significant contribution to the development of the Spanish economy. About 80.4 million people arrived in the country. What’s more, the contribution of the tourism industry to the economy was 1.4% higher than in the pre-pandemic 2019. According to analysts, this sector will remain just as lively in 2023, bringing 12.2% of Spain’s GDP.
Euribor (Euro Interbank Offered Rate) in 2023
It is worth mentioning Euribor, which stands for the Euro Interbank Offered Rate, that is, the average interest rate applied to loans. It is expected to grow at a steady pace and be between 3.5% and 4% by the end of 2023.
Projected property sales in 2023
Last year, 650,000 properties were sold in Spain, which was the highest since 2007. This figure surpassed the 2020–2021 figure by almost 100,000 units. However, by the end of the year, the pace slowed down due to an increase in interest rates. According to experts, sales in 2023 will not be record high, but demand will remain strong. The demand in the market currently exceeds the supply.
Analysts believe that the number of transactions with residential real estate in 2023 will be about 557,000, which is 14% lower than last year. Thus, it can be said there is some cooling of the market compared to 2022, but the situation will still remain quite stable for both sellers and buyers.
Property prices in Spain in 2023
Amid strong demand, property prices were going up throughout 2022. The year ended with an increase of 8.8%, slightly ahead of inflation. In some parts of the country, prices showed a more noticeable rise, for example, 13.5% in the Costa del Sol, which was the largest figure in Spain.
Analysts say prices will continue to rise in 2023, as demand remains consistently high. However, in view of a lower number of transactions, the price increase will slow down. The national average will be 1–2%. The rise in prices will affect both secondary and new-build properties.
It is also worth mentioning the demand for new and secondary housing. If last year the demand for primary real estate was higher, now secondary properties are more popular. That said, the demand for new development projects in Spain still remains high and outstrips supply. According to preliminary data, 93% of new projects in 2023 and 40% of those planned for 2024 have been pre-sold.
Investor interest in Spanish real estate in 2023
Real estate in Spain is in stable demand among investors for a number of reasons, including:
- Opportunity to apply for a Golden Visa, which is a faster way to get residency, and later obtain permanent residency.
- Full ownership of a property in a developed European country.
- Receiving income from renting out a property short- and long-term, or making a profit by reselling it.
In 2022, the Spanish residential sector received almost 60% more investment than in 2021. In 2023, demand from investors will be just as active, and there are no downward trends.
Spanish real estate rental prices in 2023
According to expert data, rental rates have increased by 1.5%. Today the average rent per square metre is €11.6. Estepona and the Costa del Sol have particularly expensive rental properties. Nevertheless, the demand for rentals is not weakening, but, on the contrary, keeps growing. This gives reason to believe that rental rates will be even higher this year.
We will help you buy property in Spain!
All in all, we can see some cooling and slowdown in sales in the Spanish market, as well as the dwindling interest of the country’s citizens in buying real estate. However, activity on the part of overseas investors remains consistently high. Optimistic economy figures indicate a rather favourable overall situation.
If you are thinking about buying a property in sunny Spain, we recommend leaving this to experts. Reach out to us right now. We will advise you on all questions that may arise, select reliable developers, and assist you in buying an apartment, villa, or beautiful house in Spain!