The Spanish real estate market is experiencing one of the best times since the 2008 crisis. The end of the COVID-19 pandemic has brought with it a lack of supply, which is making itself felt. According to experts, it has decreased by 17% over the past year due to rapidly growing demand.
Amid this situation, houses in Spain are sold for a few hours, and they are expensive and cost a lot of money. They will not decrease in prices for a long time (buyers no longer bargain, because they know that someone else can get the offer). Due to increased demand, the value of real estate grew by 3.7% in 2021. By the end of 2022, this figure will reach 10% due to declining supply and inflation.
How has the market changed in a few months?
A few months ago, watching the land boom in the Spanish real estate market, experts warned investors that this is not the right time to sell housing if they want to get back their initial investments and make a profit.
Since 2008, none of the owners have made a profit by selling their homes, despite the recovery of the Spanish economy. This is due to the fact that real estate prices have not reached the "bubble" state. However, everything has changed.
Reasons for demand growth
As already mentioned, the demand for residential properties has increased dramatically. The pandemic, which affected all spheres of life and the world economy, also had a negative impact on the Spanish market. Lockdowns have pushed many people to change something in their lives, especially to switch to remote work.
In addition, self-isolation made it possible to save money, which is unusual for Spanish culture. The failure to make plans and fear of the crisis forced local families to save 14.8% of their income. This is the highest figure in the country's history. In 2021, savings decreased to 10.9%. This figure is expected to fall to 6.9% by the end of 2022 due to inflation.
Low margin regions
However, the cities of the regions have the opposite effect. In such provinces as Soria, Caceres, Palencia, Huesca, or Lugo, which unofficially received the title of "empty Spain", the supply has doubled.
Therefore, it is possible to achieve high profitability in large cities and coastal areas of Spain. It is approximately 6.5%, depending on the region. This is a key point, as the long-term impact of inflation on the country’s economy will not predict whether this trend will continue in 2023.