What is currently happening in the Spanish real estate sector? When is it convenient to buy a property? Is it a good time to buy a home? In the following article we will try to analyze these questions from different perspectives and without any prejudice, of course, based on the objective data currently reported in the real estate sector.
For different reasons we could say that we are currently going through a time of crisis. However, it should be noted that this is a very different crisis from the one experienced by Spain in 2008. At that time there was an economic crisis as a result of market speculation, which generated a financial breakdown in different sectors. This became evident, for example, in the increase in interest rates on mortgage loans granted by entities to buyers.
The consequences of the health crisis
For many years we were building a reality in the sector above the real need that existed at that time. From one day to the next, a large number of properties appeared on the market, which led to an increase in supply and an almost abrupt decrease in demand. Faced with the crisis, even many people who had acquired a property had to give up the purchase because they could not pay for it.
As there was a decrease in purchasing power, market prices logically fell in great proportion to unusual levels, where the cost of sale was not even able to cover even the construction price of the property. Faced with this situation, asset management entities emerged that acquired the large debts generated by the banks. These mechanisms made to a certain extent that the real estate market grew exponentially during those years.
Today, in the post-pandemic era, a new crisis has clearly emerged, but not in the economic sphere but rather in the health field. This new crisis has generated the need for many people to change their way of life, for example, many people have wanted to buy a house abroad; even the so-called work nomads have emerged who have decided to move to quieter and more remote locations to carry out their work remotely.
Increase in demand and decrease in supply
This has generated growth in the real estate sector after the acquisition of new properties. In this sense, and unlike the 2008 crisis, there has been an increase in demand and a decrease in supply. After an analysis based on the properties that currently exist on the market, it should be noted that it is necessary to pay close attention to the current situation. In the current market there is available a fifth of what existed in the market during 2008. Currently, Canaria has 3% of this segment, which adds up to a total of 25 million properties that exist in the Spanish market.
It should be noted that the buildings necessary to meet market demands are not being built either. This is because the pandemic produced a rise in the prices of raw materials for construction, which limited the profit margin of construction companies. From this situation, it can logically be deduced that there will be a rise in real estate prices in the coming months. Clearly we are at a time where there is a lack of stock, that is, where there is much more demand in relation to the supply that we have available in the market.