One of the best years in the history of real estate in Spain was the year 2022. Even though it has slowed down over the past two months, as seen by a decline in the volume and number of transactions compared to the previous months, the key numerical values continue to be high. What can we anticipate for the Spanish real estate market in 2023?
Content:
- Predictions for 2023 from industry experts
- Spanish properties at the end of 2022
- Sales in Costa del Sol in 2022: an example of a successful region
- What kind of background will be in the Spanish property market in 2023?
- The decline in sales in 2023
- Decrease in property prices in Spain in 2023
- Why you should buy property in Spain in 2023?
- What will the Spanish real estate market look like in 2023?
- Home sales to foreign nationals
- Time to acquire real estate in Spain
- Conclusion
Predictions for 2023 from industry experts
Although experts' predictions for sales and prices of apartments and villas in Spain vary, all agree that both will be slightly lower in 2023 than in 2022. They also agree that real estate in strategic areas, such as the Costa del Sol, will continue to be seen as a secure investment.
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Spanish properties at the end of 2022
Let's have a look at the residential housing market in 2022 before diving into the specific forecasts for 2023. In the first seven months of the year, there were record sales and an ongoing rise in home prices. Buyers hurried to purchase real estate in the late spring and early summer before interest rates could rise even further.
In Spain, 57,333 residences were sold in September - 6.9% more compared to the same period in 2021. September, therefore, was marked the greatest month for home sales since 2007. However, experts point out that in the past months, the yearly growth in transaction volume was estimated to be in the double digits. This suggests that the Spanish real estate market will slow significantly by the end of 2022.
Sales in Costa del Sol in 2022: an example of a successful region
The Costa del Sol region was among the most successful in terms of real estate sales at the end of the year. The Property Registrars Association reports that in the third quarter of 2022, there were 10,919 transactions in the Costa del Sol. This indicator is anticipated to reach 41,898 transactions, 39.6% higher than in 2021, depending on the yearly results., The precise figures for the fourth quarter of 2022 will be available at the end of January.
What kind of background will be in the Spanish property market in 2023?
The Bank of Spain anticipated a "drop in momentum" in the first half of 2023 based on the sales statistics from the third quarter of 2022. This prediction is based on the assumption that financial uncertainty will probably continue during the first half of 2023. The fact that interest rates don't appear to be declining is crucial.
Both of these factors reduce the demand. Low purchasing power results from high inflation. Forecasts suggest that Spain's inflation will, nevertheless, have decreased by half by the end of 2023. Half of the current rate, or approx. 4.4%, is what the Bank of Spain is expecting.
New off-plan projects in Spain will continue to be developed at a slower rate than the demand dictates, and buyers will continue to experience extra challenges in the form of increased pricing brought on by growing construction costs.
The decline in sales in 2023
According to analysts, there’ll be less activity in the Spanish real estate market in 2023 than there was in 2022. It's anticipated that approx.550,000 transactions will be concluded this year. But experts have noted that 500,000 sales annually is a respectable figure, signifying a balanced market.
Decrease in property prices in Spain in 2023
Although prices have climbed considerably higher in some areas of Spain, the most recent estimates indicate an 8% increase in home prices in 2022. For instance, prices rose 11% year over year at Costa del Sol.
The majority of economists predict that the price of Spanish real estate will decline slightly in 2023. The forecasts, however, vary in terms of numbers. With the condition that adjustments will be insignificant in the most sought-after regional real estate markets, the analytical service Pisos forecasts that prices will be 1-3% lower than those at the end of 2022. In contrast, BBVA Research anticipates the growth to be around 2%, while ING forecasts a 1% increase in Spanish homes and apartment prices in 2023. Most people believe that if prices do rise, they will do so at a slower rate than inflation.
Why you should buy property in Spain in 2023?
How have housing prices changed across Europe since 2000? The biggest European real estate markets, including France, the UK, and Germany, expanded extremely quickly between 2010 and 2022. But one nation stands out above the rest - Spain, which did not follow the market's development in other European nations. As a result, Spanish home values are still 20.7% below their 2008 peak, hence, allowing plenty of opportunities for investors relying on the undervaluation of the market and the possibility of continued expansion.
It's important to note that, ahead of inflation, Spanish rental costs are climbing annually by 15% across 20 of the country's largest cities. Look at the rapidly increasing rental incomes in Barcelona, Madrid, and Valencia if you're wanting to purchase a rental property.
What will the Spanish real estate market look like in 2023?
The number of international buyers of Spanish real estate increased in 2022. Will the Spanish housing market follow this path in 2023?
In the three years following the COVID-19 pandemic, which drastically delayed the expansion of the Spanish real estate market, 2022 was the year when the demand from foreign purchasers was restored and real estate sales took off.
The desire of the residents of the UK, Ireland, USA, and other nations to relocate to Spain, as well as the investments that were made, have emerged as some of the primary factors favourably impacting the Spanish real estate market in 2022. As a result, the indicators reached and even exceeded pre-pandemic levels.
Home sales to foreign nationals
The latest statistics from the Property Registrars Association states that in the third quarter of 2022, 15.92% of all real estate transactions in Spain were for homes sold to non-Spaniards. This is the highest level in ten years.
The demand for purchasing a home in Spain has increased by 76% in the last year, but the demand from Spaniards has only increased by 13%. This shows that the market's recovery is being driven by expats and foreign purchasers seeking vacation properties along the Spanish coast.
The question is: Will this phenomenal demand growth continue until 2023?
Time to acquire real estate in Spain
The world real estate market will undoubtedly shift in 2023. The Spanish housing market will be impacted by global events e.g., the situation in Ukraine, the rising cost of living in Europe, and inflation.
People will have less money to spare as a result of the rising cost of living and may reconsider purchasing a home in Spain. However, this small drop in interest in Spanish real estate may also prompt some vendors to put their properties up for sale at more appealing rates.
Experts are certain that the Spanish real estate market will see a correction rather than a collapse. A market decline is only expected to be obvious in regions like Alicante, Murcia, and Huelva.
Buying a home in the countryside that can be used as a Bed & Breakfast is one of the options when relocating to Spain and purchasing real estate. Buying a piece of real estate in the hotel industry is another wise investment decision. The latter will provide an opportunity to run a business while living and working in Spain.
Properties offering an authentic Spanish lifestyle have also emerged as an attractive category of units for international investors. The historical sites, with a local touch, are now more appealing to tourists weary of the same type of travel in the age of globalisation.
Conclusion
In conclusion, the following is our recommendation for what to purchase in Spain in 2023:
- For rapidly growing rental revenues - housing in Barcelona, Madrid, and Valencia.
- For investments in the slowdown of the market - real estate in Alicante, Murcia, and Huelva.
- For a safe investment - an inexpensive residence in the countryside, which can also be used as a Bed & Breakfast.
- For easy business start ups- units in the hotel sector.
- To stay ahead of the trends - real estate offering a full Spanish lifestyle.
We hope that this article can assist you in deciding on purchasing a home in Spain. Experts in the real estate market always advise that you first visit the chosen locations to get a feel for the area before choosing, rather than basing your choice solely on what you read in the papers. We hope your decision turns out successfully!