Interest in real estate is picking up, both in coastal resorts and big cities. The beginning of 2021 has been quite challenging. After the first year of the coronavirus pandemic, the downward trend in foreign investment in Spain seemed to have continued.
However, an effective vaccination campaign opened up more optimistic prospects, which contributed to the general economic recovery in Spain, especially in the real estate sector with an increasing number of property hunters buying investment apartments in Spain.
Rising property prices
The reactivation of the real estate market has caused an increase in real estate prices in the main tourist centers of the region. But this is not a problem for foreign investors. They tend to buy properties that fit their requirements without paying much attention to their price tags. In fact, this is what contributes to the increase in property prices in general.
This is a trend that we are also seeing among local investors who are looking for a home not only for vacations, but also for long-term living or even telecommuting.
What will happen in the short and long term?
Since the beginning of 2021, a moderate recovery in the real estate market has been observed, which will undoubtedly continue in the coming months. There has been a growth in interest in buying or renting a second home, both by foreigners and locals. For this reason, investors will look for homes that allow you to work many miles away from your office.
In 2022, an increase in home sales is expected in the tourist regions of Spain. According to a report prepared by CaixaBank Research, in 2022 a tangible increase in home sales is expected in the tourist regions of Spain, where a significant proportion of buyers are foreigners.
In the midst of the Covid-19 pandemic, the number of purchases and sales of residential real estate in these regions decreased by 17.8%, and although the recovery is not yet fast enough, there is much to be said for a return to the previous . level.
Spain-Real.Estate experts believe that in the foreseeable future, the demand for houses and apartments in Spain by foreigners will return to its previous level, which is already noticeable by the number of search queries on the Internet. The expected introduction of a residence permit in Spain for “digital nomads” is also expected to increase the demand for houses and apartments.
What characteristics will mark the sector?
Looking ahead to 2022, everything indicates that the progressive economic recovery, together with other factors such as inflation, the supply crisis and the new Housing Law, could draw a new roadmap in the residential real estate market. On the occasion of the arrival of the new financial year, Solvia experts identify the main characteristics that will mark the sector:
–Stabilization of sales. The Spanish continue to opt for the purchase and this has been reflected in the number of operations in 2021. This year, the trend will continue. This rebound will not be as sharp as that of recent months, registering a more moderate increase, located within an estimated range of growth in the number of transactions greater than 5%.
–Rising value of real estate, with more moderate increases. Although this indicator will be conditioned by several factors, such as inflation, the influence of the end of the moratoria in the second half of the year or the shortage of supplies, the forecasts seem to indicate that house prices will continue to rise. With small fluctuations, showing moderate increases of approximately 3%, and can reach up to 6%, according to the recent forecasts of the Spanish Association of Value Analysis (AEV).
–Rebound in mortgage operations. The year 2021 has not only been characterized by the increase in the contracting of new mortgages (+26% year-on-year in October and +20% compared to 2019, according to the College of Registrars), but also by the increase in novations or subrogations. This advance, caused by the growth in demand for housing, the facilities now offered by the law regulating real estate credit contracts or the favorable conditions offered by banks, will retain its positive context in 2022.
–Increase in housing supply. Despite the fact that the Bank of Spain warned at the end of 2021 of a housing supply with little dynamism, especially with regard to new construction housing and single-family properties, a type of asset that has begun to arouse great interest in the market, also pointed out that this path would change in 2022, at least in the medium term, thanks to the implementation of the Housing Rehabilitation and Urban Regeneration Plan, which, backed by European Next Generation funds, could boost residential activity, both rehabilitation like new construction.
–Recovery of the rental market. Although it remains to be seen how the new Housing Law affects the rental market, which is expected to come into force in 2022, forecasts suggest that this new year will mark a turning point, with a recovery in demand and, very especially, of prices, which will experience a generalized increase of approximately 5%. First, in the big cities and, later, in the rest of the country.
–Growth of professional rental management. Currently, more than 90% of the rental housing stock is in private hands. This makes it difficult to respond to new market demands, such as digital access to contracting and rental services, or adaptation to issues related to energy efficiency or new legislation.
–Build to rent boom. The improvement in the rental market, the greater interest in newly built properties, and the increase in professionalized management of leased assets will make build-to-rent one of the major trends of the year. In fact, by 2022, the increase in investment in this line of business will exceed 10% according to the latest estimates.
–The digital transformation of the sector, more real than ever. The COVID-19 health crisis accelerated the digital transformation processes of many sectors, including real estate, which led many traditional real estate companies to look for new alternatives to attract customers and facilitate processes. It is expected that during 2022 this trend will take hold, which allows, among other things, the signing of mortgages electronically, virtual visits, the professionalized management of potential buyers or tenants, or the use of machine learning to predict demand.
If you are interested in buying or selling your property and need professional advice, contact us and we will manage all your requirements as soon as possible.