About 55,000 real estate agencies in Spain are on high alert. The market, quite suddenly, faced another manifestation of a shortage in the market — most of the apartments in the country are sold out.
After the active phase of the pandemic, against the backdrop of the economic recovery of 2021, and then driven by the crisis that began in 2022, tens of thousands of people rushed to the Spanish residential real estate market.
It was attended by both local buyers and international consumers and investors. Someone saw an opportunity to upgrade their place of residence, having accumulated considerable money during the pandemic, someone was looking for a «quiet bay» for their savings, seeing a rapidly worsening global crisis on the horizon.
In any case, 9 years of growth of the local market and the high excitement of recent years have begun to demonstrate clearly the unpreparedness of the market, the lack of housing, low construction rates and a chronic shortage of land for new projects. Already at the beginning of 2022, experts were sounding the alarm about the shortage of real estate on the market, but with all this, few expected such a result of the year.
At the same time, it should be noted that high inflation, an increase in lending rates, an increase in living expenses and a drop in the level of prosperity of the population remained in place. The crisis is getting worse and more and more people are being cut off from the opportunity to acquire a new place to live. Nevertheless, for a thousand small buyers there will always be a couple of super-wealthy people from abroad who look at local housing as an investment asset.
They are willing to spend incredible amounts of money on the purchase of local housing. And they spent, rapidly reducing the supply of luxury real estate, houses, villas, townhouses and apartments. At some point, housing became not a consumer product, but an asset for investment for investment's sake. So much so that some regions of Spain even thought about restricting the right to purchase housing for foreigners.
The growth of demand, primarily foreign, continues to grow, supply is declining, developers will be able to put new objects on the market only in a few years, and real estate agencies are actively exploring every corner of the country for free offers.
It could be assumed that for thousands of ordinary consumers, the «Plan B» could be housing rentals. However, this sector is also at the historical maximum of price growth with a noticeable shortage of offers. In addition, many landlords are the same ordinary citizens of the country, they are also affected by the crisis, the growth of spending on consumer goods and services necessary for life. Even if they wish, not many of them can afford to keep rental rates low.
What does the whole situation promise in the future? Since the late 1960s, the construction sector and the real estate market, including the real estate business, have been one of the key contributors to Spain's total GDP. For example, in 2008, 19.2% of the country's GDP came to these sectors, and in 2017 — 15%. According to Eurostat data, the construction and real estate sectors on average provide 17% of the country's GDP, which puts Spain ahead of other EU countries, where this economic sector accounts for 7% to 12%.
All this means that high prices with a shortage will cut off a huge number of buyers from the local market in 2023. This will lead to a sharp decline in demand, followed by a sharp drop in the volume of transactions on the market and prices. According to Atlas, the average price of residential real estate in the country will fall from 1,706 to 1,691 euros this year and the trend will continue in the future. Thus, the Spanish economy in the near future, if it loses one of the main sources of growth, it will significantly weaken at its expense.