People have always been attracted by the idea of owning their own housing. It can be two houses or even three. This prospect is especially attractive for those who see themselves as a future investor, homeowner and landlord. However, often buying real estate, for example, for the purpose of renting out, may turn out to be not just an unprofitable and unpromising option for investment, but a catastrophic black hole for savings. Especially if the reason for this was the wrong choice of time and place to buy.
So what does the Murcia market tell us about the current moment? Only in January 2022, we received results that confidently confirm the recovery of the local real estate market after COVID-19.
Let's go back. In 2020, the market lost about 9.9% of the total volume of transactions in annual terms. However, already in 2021, real estate sales in the region exceeded the indicators of 2020 by 31% and the indicators of 2019 by 18%. In January of this year, the sale of 1,751 real estate units was recorded in the region, which is almost 33.1% more than a year earlier, in January 2021.
Ferran Font, Head of the Research Department of Pisos.com, indicates that the Spanish real estate sector has continued to demonstrate healthy growth dynamics for two years, clearly showing its ability to be one of the safest markets for investors. Just as it has demonstrated resilience against the backdrop of the pandemic in the past two years, this market continues to remain stable in the face of rising inflation, rising interest rates and international tensions.
Rising prices
However, the growth of the local market may significantly decrease in the coming months due to rising real estate prices, which is one of the main factors that can negatively affect the dynamics of consumer demand growth. According to the Pisos report on prices in the region, only in April, and only in the secondary segment of the housing market, the average sale price increased by 5% to 1,086 euros per square meter. If you look at the capital of the autonomous community of the same name, you can see that in April, the increase in housing prices in this segment was already 9.87%.
The rental sector of Murcia also did not escape the price increase. Over the past 12 months, rental rates in the region have increased from an average of 1.92% to 8%. In April, renting a residential facility with an area of 90 square meters costs about 530 euros per month. In the capital of the community, the price tag has increased to 740 euros per month.
Font reports: «Although buying a home on the secondary market is more expensive today than a year earlier, price growth is still below the general price index. Sales figures remain strong, although some data show a slowing trend».
Profitable market
But despite the rise in prices, today Murcia offers a very attractive market for investment. According to the data at the end of the first quarter of 2022, it was known that this region is cheap enough to move and still has significant room for growth in comparison with other regions of the country. So, to move to Murcia, an ordinary buyer will need about 4.6 years of employment. The average for Spain gives a period of 7.2 years. To buy a home in Valencia and Andalusia, for example, you will need to save wages for 5.5 years and 6.4 years.
According to Pisos, the gross rental yield in Murcia was 6.43% for the first quarter of 2022. This coincides with the national indicator and places the autonomous region in the top five most profitable regions of Spain, including the Canary Islands (6.83%), Aragon (7.30%), Extremadura (7.89%) and Castilla-La Mancha (7.94%). But when measured by cities, the capital Murcia demonstrates a yield of 7.6%, which makes it the leader in the country and allows it to overtake Zaragoza (6.34%), Seville (6.25%), Las Palmas (6.07%) and Oviedo (6.03%).