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Last Updated on 18/07/2023 by STEPHANE

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Spanish real estate outlook 2022

 

Don’t miss our Spanish real estate outlook 2023, it is just out and it will give you a better analysis than this article written one year ago.

 

The positive of this Covid crisis is that people want, more than ever, to spend their time efficiently and live the life they want… No more lost time. As Confucius said: “We have two lives, and the second begins when we realize we only have one.” So, Let’s go back to “The” essential: Yourself! Because you are at the centre of your life: whatever your pursuit is! Have a look at our detailed article for more on that. We stopped as well to study what experts are telling us about happiness: Your 7 positive life changes after the Coronavirus.

Last but not least, due to Covid, we all had this feeling of losing liberty. We all want to get it back and enjoy life 300%, don’t we?

 

In this environment, Spain has a lot to offer to Spaniards, foreigners and remote workers: a high quality of life. Actually, Spain is one of the best places to relocate and work remotely thanks to 320 days of sun and of course the cheap cost of living in Spain.

 

We are optimistic about the outlook for the real estate market in Spain in 2022. While we have to admit that the comeback of the Spanish real estate market (and everywhere in the world) was quicker and stronger than we expected. But if we compare it to international markets, the rise is reasonable and not speculative.

 

 

Why are we optimistic about Spanish property prices in 2022?

 

We observe a very healthy market: property prices are rising not too aggressively because we have a lot of activity spread everywhere in Spain:

everyone, according to their own financial means, will try to improve their living conditions.

Both Spaniards and foreigners want to improve their daily life in the current environment:

get a better home: more space inside and outside and more light, and for those who can afford it, buying a second home outside city centres and with a nice weather (foreigners) is ideal to relax once work is done, or even better, why not work from my second home?

That is why we are optimistic for 2022: everybody is active to improve his own living conditions: people with high-end budgets go for more space either in cities or outside city centres and by doing so they allow others with smaller budgets to do the same… and so on to the small apartments in the city centres.

So, our view is that prices could surprise on the upside and rise between 3% and 6%!

 

Many positive elements for the Spanish real estate market in 2022

• Thanks to homeworking, a new major trend is active on any real estate market in the world: people leaving city centres for suburbs and second tier cities.
• Anyone will try to upgrade for more space even if they can’t leave or don’t want to leave city centres.
• All our partners, everywhere in Spain had a very busy year in 2021: lawyers, developers, property hunters,… It was really impressive.
• Spanish property prices remain very competitive vs other international markets.
• Mortgage rates remain cheap in Spain.

• Transactions’ volumes are strong in 2021 across all the Spanish local markets: rising by more than 20%, of course, 2020 was a weak year due to Covid, so 2021 getting back to pre-covid levels (and a little bit more).
• Activity is spiking mostly from Spaniards, which means the trend is broad-based and not only in certain areas.
• Foreigners are getting back but are far less active than “pre-Covid” era.
• Real estate market in Spain strong: Have a look at our detailed quarterly report with all the prices’ evolution for the top 20 Spanish cities: Spanish property rose by 2,6% over the last 12 months to September 2021
• We note that the major cities are back to their pre-Covid levels: Barcelona, Madrid,…
• Second tier Spanish cities all over Spain are rising the most while staying cheaper than the national average: Málaga +7,6%, Almería +5,6%, Huelva + 5,1%, Tarragona +4,9%, the Balearic Islands +4,8%, Alicante +4,6%, Sevilla +3,9%, Bizkaia +3,9%, Cádiz +3,9%: this means that the rise is spread over all the Spain.
• Inflation is rising everywhere in the world… This means that every day, currencies lose their value. So, one of the best hedges against inflation is holding “real assets”. There are not a lot of alternatives if you want to protect your savings against inflation.
• The rise in raw material prices has resulted in a 5 to 10% increase in production costs. This will increase the prices of the new building developments.
• New build properties do not oversupply the market for the time being, on the contrary, it remains under control and on the weak side vs demand.

 

What are the current experts forecasts for the Spanish property market?

• The bank of Spain predicts a return of 7% for the Spanish real estate market
• The Spanish real estate market should remain strong according to El Economista as European real estate markets are strong, +8% up to Q4 2021, and back above 2007 levels, El precio de la vivienda subirá al mayor ritmo en 30 años en la Eurozona, El Economista
• The price is going to rise by 10% and sales by 15% in 2022, estimates Gonzalo Bernardos, professor and director of the Real Estate Master’s programme at the University of Barcelona.
• CaixaBank wrote in its 2020 interesting research that: according to the Bank of Spain’s own estimates, the price of housing at a national level is currently close to equilibrium. They noted that prices were too high vs income in the major cities and that there was a lot of price divergence within provinces: “The gap between the most expensive and cheapest provinces and cities is widening. In 2019, buying a home in Barcelona or the Spanish capital will cost more than double the national average, while in 2014 it was «only» 1.6 times more.” The situation remains the same one year later and this gap is even higher in foreign countries.

 

Are there any major downside risks?

The biggest risks we see for the time being are:

• Central banks in the world are getting less aggressive at providing the markets with liquidity: the Fed, the ECB,…
• Long term interest rates spiking

• Inflation is spiking everywhere and the central banks could decide to get more aggressive
• The Chinese economy is dependent on the evolution of the real estate developer Evergrande.
• The consumer could not afford inflation anymore.

 

Are we in a real estate bubble in Spain?

Many experts don’t think so as:

• The portion of real estate vs income is not excessive for most Spaniards
• Leverage is not excessive
• Building companies have less leverage
• The number of new build properties coming to the market is not excessive.

Here is another article to read more on that: Are we in a property bubble in Spain?

 

What are ideal property search criteria?

 

We need to differentiate locals from foreigners.

Let’s start first with foreigners. Foreigners are searching either for a second home or a place to retire.

 

What are the property criteria demanded by foreigners in a post-Covid-19 world?

• close to the beach,
• maximum a one-hour drive from an airport,
• more rooms and a bigger property as foreigners will be more often at their second home,
• some private outside space: terrace, garden, a pool,
• close to sports and children’s facilities,
• restaurants and shops nearby,
• a nice view,
• not too far from the city centre, but not inside!

As said, we expect a strong pick up of activity by foreigners on all the major Spanish Costas in 2022.

 

 

Have a look at our interesting articles on the subject: Our ultimate guide to buying your property in Spain is our major guide on the subject but you can find dedicated articles as well:

• Where are the best places to buy a property in Spain?
• The best searching tips for buying your Spanish property
• Buying your holiday home in Spain? Get our 40 tips
• Your ideal investment property in Spain: 58 tips to find it
• The best 44 tips for finding your ideal home to retire to Spain

 

Spaniards will remain the biggest driving force on the Spanish property market.

As there is a lot of diversity and the market is very big, we see everywhere in the world that second-tier cities are getting some nice activity, both in terms of transactions and pricing.

 

What are the property criteria for Spaniards in a post-Covid world?

• bigger private places inside and outside to play for the children,
• more private places to work and to have a social life at home,
• a lot more natural light as we are living 24/24 at home 4 days a week.

So, here is the real choice Spaniards will need to make: space vs commuting time, luckily, thanks to the Coronavirus, homeworking could become more the norm than before. That is why Spaniards are moving outside city centres to get more space inside and outside at a cheaper price.

 

Have a look at our interesting articles on the subject:

• Our ultimate guide to buying your property in Spain
• Where are the best places to buy a property in Spain?
• The best search tips for buying your Spanish property
• The best 41 tips for finding your best home for moving to Spain

 

Looking for a local property hunter, a local lawyer, … any expert in Spain? Ask us directly!

Stéphane

Senior analyst and strategist at HTBIS

Check the full HTBIS team here

 

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