2022 was unique for the market of real estate in Spain. Demand for housing has grown not only among residents but also among foreign investors. The reports of the College of Registrars of Spain note that "foreign demand for housing was recorded at the maximum level," referring to data for the third quarter of 2022. Let's take a closer look at what figures the past year has shown and what are the prospects for the real estate market in 2023.
Content:
- The results of 2022
- The most sought-after areas and property types
- Market prospects
- What else to consider?
The results of 2022
In 2022, overseas buyers purchased more houses in Spain than during the entire two-year period of restrictions caused by the pandemic. In the first half of the year alone, notaries registered 72,987 transactions with foreign investors. Such figures have not been recorded since 2007. Foreign investors accounted for almost 20% of the total number of transactions. This trend continued in the third quarter, with 26,728 homes acquired by foreigners, which is 15.92% of all transactions concluded. This indicator has no analogues in the history of sales.
Leading buyers in Spain among foreign investors
British people buy houses and apartments in Spain. They accounted for 9.3% of the total number of transactions in the local real estate market in 2022. The Germans rank second with an indicator of 8.0%. The remaining three places in the top five are the French (6.2%), Romanians (4.6%) and Belgians (4.3%).
Residents of Britain, Germany and France are the most active buyers. However, in 2022, buyers from the Netherlands, Norway and Ireland were also active. Part of the sales came from citizens of Ukraine, the USA and Latin America.
According to experts, the growing interest of overseas investors is linked not only to the comfortable climatic conditions of Spain and affordable prices but also to political instability in Europe. The situation in Ukraine and the energy crisis are forcing people to look for places for reliable investments of assets.
Prices break records
In 2022 the Notary General Council recorded the highest amounts that foreign buyers have ever paid for Spanish real estate. In the first half of 2022, the average cost per square meter reached 2,062 euros. Year-on-year growth was 10.6%. These indicators are average and not the highest.
Residents of Denmark paid the most for apartments in Spain. They bought real estate in the country at an average price of 2,870 euros per m2. Citizens of the USA bought real estate for 2,837 euros per m2 and Norway paid 2,701 euros per m2 lagging slightly behind them.
The most sought-after areas and property types
Analysts note a heightened interest in premium real estate. An increasing number of foreign investors prefer non-compact apartments in development projects in Spain. They prefer spacious houses with free space for all family members, as well as with a house plot. This choice was contributed by the pandemic, when, in conditions of self-isolation, citizens of many countries saw a lack of free living space.
Coastal resort areas are in great demand among the Spanish regions:
- Balearic Islands
- Canary Islands
- Costa Blanca (Alicante)
- Costa del Sol (Malaga)
Madrid, Barcelona and Valencia are still in great demand as not all foreign buyers prefer large administrative centres.
At the same time, many people choose provinces far from the active tourist flow to lead a more secluded lifestyle. Another reason for buying real estate in communities with less than 5,000 residents is the more affordable cost of housing. In several municipalities, you can find offers from 500 to 1,700 euros per m2.
Market prospects
Opinions on the outlook for the real estate market in Spain are mixed. Some experts note that an increase in mortgage rates may have a short-term downward impact on demand. At the same time, other analysts say that this increase is not so critical to scare off overseas buyers, especially those who are planning to buy a home for cash and without a mortgage.
Most experts insist on the stability of the market and say that the bubble effect is still far away. Moreover, the shortage of ready-made offers could push prices up. Most likely, it will be a more moderate increase than in 2022.
Carlos Zamora, director of Knight Frank analytical agency, believes that the market will remain stable and attractive to buyers, despite the risk of recession. As Spain remains interesting for both domestic and international customers, 2023 will provide many opportunities for both local developers and real estate investors.
The number of foreign buyers will grow, which contributes to the high quality of life in the country. 2023 will be the year when foreigners will buy housing. After the pandemic situation stabilises, Europeans will prefer areas with a better quality of life. Moving to Spain also allows you to work remotely from anywhere in the world.
According to Rosa Uriol, deputy head of the Spanish Research Evaluation Department, in 2023, the Spanish real estate market will remain fairly unspent, despite the increase in interest rates as part of inflation. The country's economy will overtake other eurozone countries, attracting foreign investors. There will be some price adjustments in 2023, although they are not expected to have a dramatic impact on real estate investment in Spain.
What else to consider?
There is a shortage of housing stock in densely-populated and sought-after areas of the country. Overpopulation and lack of housing for residents is quite a serious problem for the Balearic and Canary Islands which is popular with foreign investors. The government of the Balearic Islands has announced restrictions on the purchase of local housing for foreign nationals. So far, the conversation is only about discussing these actions. The Canary Islands have taken similar measures to restrict sales to non-residents. It is difficult to say whether the authorities will decide on such a step in 2023. However, it is better for those who want to invest in Spanish real estate not to postpone their decision to purchase a property in the country until a wide range of properties is not yet limited at the legislative level.