There are fewer days until the end of the year. 2021 was marked by a general recovery process, greater mobility between countries, an increase in house sales, the attraction of international investors and a steady decline in rental prices. What will happen in 2022?
The housing sector is still dependent on the overall economy and the spread of the coronavirus in the country and the world.
According to the analytical company Observatorio Sectorial DBK de Informa, in the short and medium-term, the real estate market has favorable outlooks to improve economic conditions, low-interest rates and growing savings. This means that we can expect a revival in demand and stabilization of prices for apartments in Spain in 2022.
- The real estate market in Spain
- Secondary housing
- Uneven growth across autonomous communities
- Spanish real estate and market prospects in 2022
- How is the recovery in the real estate sector affecting the rest of economic activity?
- Prices for new housing
- Second residences
- How the pandemic affected property prices
- Rental prices
- Areas where the purchase price will fall or rise the most
- Good time to shop
- How much is a property in Spain?
- We will help you buy property in Spain
The purchase and sale of housing in Spain reached a level in September 2021 that has not been observed in the last 161 months. According to the National Institute of Statistics (INE), the real estate market recorded the best month since April 2008 (53,410 transactions). Purchase intentions, paralyzed by pandemics, are being realized now to create new demand. It is necessary to mention the economic recovery and changes in property prices in Spain after the crisis and its effects on the Spanish real estate market. Over the past 4 years, house sales have exceeded 2019 indicators.
More than 53,000 transactions were concluded in September, which is 40.6% more than a year earlier.
In terms of real estate typology, the latest data from the National Institute of Statistics (INE) show that the recovery is observed mainly in transactions of secondary housing, making up the bulk of the market. Secondary housing accounts for 42,477 purchase and sale transactions.
September’s figures show uneven growth across autonomous communities. Extremadura is the only province with fewer deals than a year earlier (-2.4%), while Asturias showed relatively low growth year-on-year (1.4%). In all other territories, sales and purchases are growing with varying strength: Murcia, Castilla-La Mancha and Madrid recorded an increase of 20%; and in the Basque Country, Catalonia and Andalusia it was about 55%. Navarra stands out with almost 70% more properties sold than in September 2020.
4 major regions of the country dominate in terms of sales in September 2021 (more than 6 out of 10 transactions occurred in these communities): Andalusia is in the first place (11,843 transactions), Catalonia in second (8396), Valencia is third (7617), and Madrid fourth (7071).
2022 is expected to develop amid economic recovery with supply problems and high energy prices persisting in the first half of the year. It is also necessary to closely monitor the evolution of inflation and its potential impact on consumer confidence. In the real estate sector, demand will remain strong in an environment of low-interest rates, while supply may grow at a slower pace. This is due to labor shortages in the sector and long licensing periods that developers have already faced in the years leading up to the pandemic. All this can lead to an increase in housing prices, especially in the segment of new construction. European funds will provide public-private cooperation and urban rebuilding and revitalization projects. With their help, the efficiency of the real estate market in Spain will be increased. It is expected that the text of a future housing law will also be drafted during 2022, which will set the framework for developing the sector in the coming years.
The real estate sector is the driving force behind economic activity as housing construction has multiple effects on direct and indirect employment. We are talking about construction workers and suppliers of materials, architects, engineers, carriers, and notaries. Construction of every house in Spain creates jobs, not to mention the tax-related revenue stream to the government treasury. These 2 areas develop simultaneously; if a country’s economy does well, the real estate sector is developing. In 2008, real estate was at the epicenter and part of the problem. The real estate sector is robust, healthy and balanced, demonstrating strength and resilience, thus playing a pivotal role. Real estate should be an essential part of the economy, one of the major engines that help its economy.
We are in a situation where the demand for housing is recovering faster than the supply, causing price tensions in the new construction segment. In more dynamic markets, this supply shortage and the associated upward changes in property prices in Spain may intensify in the coming months as the pandemic has slowed the start of new projects. In any case, we understand that the upturns that may occur will be moderate. Another aspect that needs to be watched closely is the increase in the cost of certain raw materials affecting construction costs in recent months. Fortunately, we are already seeing signs of declining prices for some commodities.
The second residence, especially in areas with international buyers, was hit hardest by the market break during the pandemic. While national demand has partially offset the situation, mobility restrictions have delayed recovery in these areas. With a rebound in international demand, prices are expected to stabilize gradually.
Of course, the pandemic has changed our way of life, which manifested itself in a partial transformation of the demand priority, bringing to the fore such aspects as flexibility in the use of space, a large area, an abundance of light, and the presence of terraces and common areas. These functions are the most in-demand in the market. We also see an increased interest in energy efficiency in houses associated with lower future energy costs and improved comfort for residents.
After analyzing the results of the IX wave of the Real Estate Barometer, José Manuel Fernández, CEO of the Union of Real Estate Loans (UCI), said: “We see the prospect of absolute price stability in recent months and realtors who know the pulse of the market believe that by the end of this year and the beginning of 2022, stability or slight growth (not exceeding 10%) will be the trend in property prices. “
According to various price indicators, rental prices have been declining in recent months. Will they continue to decline? Tony Exposito, CEO of Real Estate Agency Comprarcasa, believes that the decline in the European Interbank Offered Rate (EURIBOR) and interest rates make 2021 one of the best times to apply for a mortgage.
Tony Exposito states: “Thus, we can say that the upward trend is observed mainly in sales and purchases, which affects the decline in rental prices. However, it should be noted that the decline is insignificant and interest in renting is still significant in the real estate market.”
In addition, housing law can stabilize rental prices in areas that are traditionally high.
José Manuel Fernández believes that there is a significant dependence of housing prices on employment (remote or stationary), which affects supply and demand. For example, if there was a rise in prices in the border areas of major cities in Spain last year and early this year, such as the Sierra de Madrid, due to high demand, now it may decrease if employment moves to offices. This could lead to a possible rise in prices in its main urban centers.
The Spanish Association of Real Estate Buyers, Aepsi, predicts that the growth in demand in 2022-2025 could be significant and increase real estate sales (could amount to more than 550,000 properties).
Demand has evolved since last year. Isolation has made housing the center of family life.
In general, the trend of price development will moderately increase. In such moments of uncertainty, discounts and favorable conditions are spread out. As the economic situation improves and the labor market stabilizes, price adjustments fade into the background. On the other hand, financing is now cheaper than it will be in a few months with rate hikes expected in 2022 and 2023.
Experts from the Union of Real Estate Loans USI (UCI) are optimistic about the future stating: “A few days ago we had a meeting with about thirty executives and managers of large real estate chains in Spain, and almost all expected an increase in their turnover next year. In addition, a powerful impetus for home purchases is provided by the low EURIBOR rates until mid-2022”.
The big challenge, according to experts, is to provide youth and other vulnerable groups with shopping opportunities, which will require the cooperation of all public and private actors.
How much is a property in Spain?
The table below contains information about Spanish housing costs for November 2021.
|The cost of 1 m2 of real estate in Spain, in euro||The cost of 1 m2 of real estate in Spain, in rubles||Monthly fluctuation||Quarterly fluctuation||Annual fluctuation||Historical maximum||Maximum fluctuation|
|Spain||1816||153 343||+ 0,2 %||- 0,6 %||+ 3,7 %||2053 €/м2 June 2007||- 11,6 %|
|Andalusia||1773||149 712||+ 0,4 %||+ 2,2 %||+ 8,0 %||1924 €/м2 July 2006||- 7,8 %|
|Aragon||1295||109 349||+ 0,2 %||- 2,6 %||- 3,2 %||1924 €/м2 November 2007||- 32,7 %|
|Asturias||1344||113 487||+ 0,2 %||- 1,0 %||- 1,7 %||1847 €/м2 June 2011||- 27,2 %|
|Balearic Islands||3260||275 274||+ 1,7 %||+ 1,6 %||+ 6,6 %||3260 €/м2 October 2021||0,0 %|
|Canary Islands||1933||163 222||+ 0,6 %||+ 1,7 %||+ 5,3 %||1937 €/м2 May 2007||- 0,2 %|
|Cantabria||1482||125 140||+ 0,2 %||+ 2,2 %||+ 1,7 %||1988 €/м2 January 2011||- 25,4 %|
|Castile and Leon||1140||96 261||+ 0,7 %||- 0,3 %||+ 1,6 %||1468 €/м2 June 2011||- 22,3 %|
|Castile-La Mancha||872||73 631||+ 0,3 %||- 0,3 %||+ 2,1 %||1362 €/м2 April 2008||- 35,9 %|
|Catalonia||2286||193 029||- 0,4 %||- 1,6 %||+ 1,1 %||2573 €/м2 June 2007||- 11,1 %|
|Ceuta||1942||163 982||+ 0,3 %||- 7,8 %||- 3,1 %||2256 €/м2 January 2021||- 13,9 %|
|Valencian Community||1483||125 224||0,0 %||- 0,6 %||+ 5,5 %||1839 €/м2 January 2006||- 19,4 %|
|Basque Country||2682||226 468||- 0,1 %||- 0,2 %||+ 0,7 %||3244 €/м2 April 2011||- 17,3 %|
|Extremadura||949||80 133||+ 0,5 %||+ 2,6 %||+ 4,4 %||1203 €/м2 April 2011||- 21,1 %|
|Galicia||1340||113 149||+ 0,1 %||0,0 %||0,0 %||1762 €/м2 November 2011||- 24,0 %|
|La Rioja||1250||105 550||+ 0,1 %||+ 0,7 %||+ 4,0 %||1600 €/м2 March 2011||- 21,9 %|
|Madrid (autonomous community)||2917||246 311||- 0,3 %||- 1,3 %||+ 4,3 %||2954 €/м2 July 2021||- 1,3 %|
|Melilla||1823||153 934||+ 0,4 %||- 0,1 %||+ 2,6 %||1855 €/м2 July 2012||- 1,7 %|
|Murcia (autonomous community)||1068||90 181||+ 0,3 %||+ 1,1 %||+ 1,9 %||1684 €/м2 September 2006||- 36,6 %|
|Navarre||1455||122 860||+ 1,2 %||- 0,1 %||+ 0,3 %||1787 €/м2 December 2007||- 18,6 %|
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