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Follow this link if you are looking for the last update on the real estate prices for the top 20 Spanish cities.
Property investment in Spain: a very strong return of +11.2%
According to statistics released by the Central Bank of Spain in November 2022, the return expected on the residential Real Estate market in Spain is 11% and 8.4% if you take a mortgage – Green line on the chart. Not a bad property investment in Spain!
This performance comes from two sources:
- gross rental yield estimated at 3,6% –Blue line on the chart– and
- capital gain estimated at 7.6%.
Here is what we will cover in this article:
The Spanish real estate market has been strong since 2014
Sure Covid came to impact the market for the last three years to the end of 2021 but since 2022 here are the main evolutions:
As a reminder those are the trends that impacted the real estate markets worldwide post Covid:
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- people are buying bigger, with more outside spaces and lights
- people are buying outside big cities
- foreigners are less active due to travel restrictions (but at HTBIS we could see a strong pick up in activity since the end of 2020)
Don’t miss our detailed quarterly report: The top 20 property markets in Spain
Now, we are fighting against a new “issue”… inflation. The good news is that the Spanish real estate market offers a nice hedge against inflation up to now and returns remain stron.
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Spanish real estate return is back above 10% since May 2019
Of course, the uncertainty in the economy that came from Covid was noticeable in 2020 but since 2021, the market is rebounding strongly both in terms of transactions and prices. Have a look at our Spanish real estate quarterly report studying the property price evolution in all the top 20 regions of Spain for more.
Have a look at our interactive chart (yes when you come back, it will be updated). As you will see, property investment in Spain was wise since 2014.
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Mortgage rates in Spain are rising since the start of 2022 at 2.9%
Yes, inflation is back, and so interest rates are rising. As of November 2022, mortgages rates were issued at 2.9% in Spain, Red line on the chart
Read our article updated every month with the current mortgage conditions, we have added many interesting statistics to follow as inflation levels: Find the best mortgage rate in Spain
We told you since 2020 that the risk was there for inflation spiking. Now, low mortgages are a history of the past but our view is that at the current levels of mortgages rates are still low. Another interesting thing to note is that real estate buyers are taking fixed-rate mortgages to finance their real estate purchases right now. Read more on that: Fixed or variable rates mortgage?
Have a quick look at our Spanish mortgage calculator if you want to know what is your purchasing power to buy a property in Spain:
The first real positive return since the crisis of 2008 came in early 2014 … six years ago…
As you can see on our chart, the estimated return became slightly positive for the second time since 2008 at the start of 2014. In 2010, the estimated return went slightly positive but it was not enough to compensate for the mortgage costs. The performance was much stronger in 2018 as the estimated profitability was higher than 10%. Right now, with close to 6%, the estimated profitability covers more than 3 times the current mortgage costs.
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Real estate prices are lower than 10 years ago
Are there a lot of downsides to where we are here? Check the chart of real estate price evolution before and after 2007:
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Spanish real estate returns have the second weakest performance in Europe on a 10-year time frame
Have a look at the comparison of the real estate market in Spain vs other European countries on any time frame between 3 months and 10 -year time frame
As you saw on this histogram, Spain has the weakest performance in a 10-year time frame. Click on the chart to check the performance for other period lengths.
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Spanish Real Estate has the highest yields vs many European Cities
Discover the best new build projects in Spain available right now
Is Spanish property a good investment? Spain is in the sweet spot for a property investment if you check the real numbers!
If you want to know your property return for your Spanish property, you need to know a few data: your rental income before and after costs, your property prices and of course it is good to know the costs of your property including taxes. For more on that, read: the cost of owning a property in Spain and What are the taxes you have to pay on your Spanish property?
Buy to let? Spain offers some of the best returns in Europe:
- Madrid is in 7th place in Europe with a return of 3,9% and offers one of the best rental yields in Spain with more safety on your investment.
- Alicante took over the second place one of the best rental yields in Europe with a return of 4,6%, not bad
- Barcelona is the eleventh city in Europe with a yield of 2,2% according to Deloitte. Rents went down heavily in Barcelona for a few reasons, in 2020, the local authorities did introduce a cap on rents… while at the same time, the lockdown was quite strong, and a lack of demand from international businesses. We wouldn’t be surprised to see the yield come back up in the years to come.
Check the best rental Yields for the major European Cities, Madrid, and Alicante have rental yields close to 4%.
Barcelona and Madrid are the 5th and 8th most expensive European cities in terms of price/m²…
Have a look at our interactive chart
But check on the above chart, the price/m² in London is 7,916€/m² and 12.917€/m² in Paris… while Barcelona and Madrid are closer to 6.000€/m² and 5.000€/m².
You read it correctly: less than one-quarter and one-third of the price of London and Paris. Period.
Now, you understand why the returns in Madrid and Alicante are much higher than the ones in Paris and London.
Do you think that the downside risk is higher in Barcelona and Madrid than in Paris and London?
In the 2023 report from CBRE on European Investor Intentions, we find both Madrid and Barcelona in the top 6 as the best cities for real estate investors.
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Real estate activity has strengthened since end of 2021 …post-Covid
Close to 95.000 properties were bought by foreigners in Spain in 2021 (12 months to September 2021) and more than 545.000 by Spaniards.
It looks like others agree with our conclusions…
Check for more information on our up-to-date pages on the Spanish national real estate market (prices and activity) and on the Spanish regional real estate markets (prices and activity).
If you want to have a deeper analysis, city per city, we would suggest reading our full report on that (click on the picture):
Here is as well our report on the Most active cities in Spain in 2019 (in terms of transactions).
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Big uncertainty for the Spanish economic activity
Of course, we noticed a strong rebound in early 2020,… stopped by Covid. But activity in Spain is staying stronger than in most of the other European countries. What a roller coaster!
Check our up-to-date tables of a few Economic indicators in Spain:
But after this strong rebound, as everywhere in the world, we wait for the uncertainty to settle and the vaccines to allow more “normal” economic activity.
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Financial markets will be more volatile
2018 with a year of higher volatility and negative returns in the financial markets. 2020 saw a huge spike in volatility due to Covid. Shortly after, the Central banks poured money to support economies.
Since 2022, we expect higher volatility in financial markets due to the change of policy from central banks all over the world. As of 2023, the interest rate curve is inverted, which signals a very high probability rate of an economic recession. Of course, a big unknown is how inflation numbers will come in the next years. The good news as of mid-2023 is that energy prices came back under the levels of early 2022 when the war started in Ukraine.
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Spanish real estate outlook for 2023
As we wrote in our article, we are moderately optimistic about the outlook for the real estate market in Spain in 2023. While we have to admit that the comeback post-Covid of the Spanish real estate market (and everywhere in the world) was quicker and stronger than we expected. If we compare it to international markets, the rise is reasonable and not speculative. So, in our mind, we don’t see a real estate bubble here. The good news for international real estate cash-buyers: it should be easier to find properties as interest rates are rising.
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How do we assist our customers to buy finding their dream homes in Spain?
Whether you’re looking for a holiday home or a permanent residence, all our local partners will help you to find the perfect property in their extensive selection of properties to suit your needs and budget. With a wealth of experience and knowledge, our team of real estate professionals are dedicated to helping you find your dream property in Spain.
But we’re not just here to help you find your perfect property. We also offer a range of services to make the buying process as smooth and hassle-free as possible. From legal advice to property management, we’ve got everything covered. Don’t hesitate to get in touch with our HTBIS team.
Have a look at our interesting articles:
- The 7 pitfalls of buying a property in Spain
- Top 10 reasons why we think that the Spanish market is a nice real estate opportunity right now. We bought ourselves in 2014,… and in 2019… let’s put our money where our words are 😉 .
- Spanish Real estate market vs the other European markets – Our quarterly update
- Madrid investment case study
- Barcelona investment case study
- Tenerife property investment case study
- Six reasons to love your property shopper
Looking for a local property hunter, a local lawyer, … any expert in Spain? Ask us directly!
Senior analyst and strategist at HTBIS
Check the full HTBIS team here
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All our charts of this article are available here in a downloadable format
Property investment Spain
Calculate the return on your property investment in Spain
Foreigners’ real estate activity in Spain
Real estate prices and transactions in Spain
Source: Deloitte Property Index 2020, Overview of the European Residential Market
FAQ on the subject
Is it a good time to buy property in Spain 2023?
Yes, for sure, as you can see, prices are rising since 2014 but are far from the top of 2008. Returns are healthy and not excessive while financing remain low. Read more in our paper.
Are property prices in Spain falling?
No prices are not falling anymore in Spain. Real estate prices are rising since 2014 and remain far from the top: current average price per square meter in Spain is €1662 (end September 2021).
Can I get residency in Spain if I buy a house?
It depends if you are part of EU or not and if you have enough financial means to live. If you are not from EU countries, there are solutions, have a look at our article about the golden visa.
Where should I invest in real estate in Spain?
The top three markets in Spain offer interesting opportunities, Madrid, Valencia and Barcelona. At the same time many second tier cities are strong since the last two years
The post What return will you make on your Spanish Property in 2023? appeared first on How to buy in Spain.
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]]>Follow this link if you are looking for the latest real estate price trends for Spain’s top 20 cities.
The Spanish real estate outlook 2023
Last year, we predicted a strong market with price increases between 3 and 6 per cent. We were spot on!
The Spanish real estate market should be more stable in 2023 and we could even see some price decreases. As we will explain in this report, Expectations for the Spanish housing market are for price changes between minus three per cent and plus 4 per cent as experts have different views due to a greater uncertainty of the evolution of the economy. The good news is that many experts see it as one of the best-performing markets in Europe for 2023.
Inflation will be the main topic if you want to understand the real estate market: after many years of loose monetary policy and after the war in Ukraine, inflation is back and should stay with us for a while. We will have to cope with that. Last year we already spotted those potential risks for the real estate markets in our Spanish real estate outlook for 2022. So, this is not a surprise for us. But we have to admit that the magnitude of the moves impressed us.
In this report, you will have our detailed outlook on the Spanish real estate market and benefit from the analysis and feedback of our local experts and partners established everywhere in Spain. Of course, the market won’t rise as much as in 2022 on one hand, but it will give more opportunities on the other hand. And make no mistakes, we will explain to you why real estate prices in Spain remain conservative at current levels: we don’t see excesses as in 2008.
Last but not least, we tell you why we think that Spain’s economy should become stronger than other European countries over the next five years. This positive news should keep the Spanish real estate market healthy and in demand at least compared to other real estate markets in Europe.
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 low cost of living in Spain.
Looking for a comprehensive and up-to-date analysis of real estate prices in all major Spanish cities? Look no further than our quarterly report, which provides precise insights you won’t find anywhere else.
The Spanish property market will be a buyers’ market in 2023
Here are the important metrics to follow in 2023:
- Inflation
- mortgage rates
- the consumers’ purchasing power
- Economic activity in Spain and in Europe
- Remote working
- Of course as usual what will be the activity of foreigners in Spain in 2023?
Yes, let’s start with the bad news: inflation is back. That is why both short-term and long-term interest rates have risen. So, as a consequence, mortgage rates are much higher now than one year ago. We expect this situation to stay at least two years, maybe more. So, property financing with mortgages will be less easy for buyers and the Spanish economy should moderate in the short term. Those are the two main reasons why we think the Spanish property market will mark a pause in the short term. The good news is that mortgage rates are not crazy if you compare them to inflation.
Check the evolution of the mortgage rates: average, fixed and variable over the last year
Transactions should decrease and prices should be stable or decrease slightly
as on one hand, economic activity will be less strong and on the other hand mortgages rates are rising.
Both Spaniards and foreigners will be less active, which will give more opportunities for the buyers, and even more for the foreign cash buyers that don’t need a mortgage.
Foreign cash buyers will be the perfect time to get a better home: more space inside and outside and more light, and for those with a smaller budget, our advice is to go after a second home outside city centres.
That is why we are optimistic for foreigners in 2023: opportunities will be there and the market will be less tense.
So, our view is that prices could decrease between 1 and 3%!
What about the GDP growth in Spain for 2023 and 2024?
The FMI predicts that Spain will have strong GDP growth in 2023 and 2024: 1.1% and 2.4%.
Are we at risk of a big property price decrease as in 2008?
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?
So, the short answer is no, we are not at risk of a big price decrease, as long as the economy remains stable, as current property prices in Spain are not overextended. Read our quarterly report for more on that: Spanish property prices remain very competitive vs other international markets.
The biggest risks we see for the time being are:
- Central banks in the world are aggressively raising short-term interest rates: the Fed, the ECB,…
- Long-term interest rates are spiking
- Inflation is spiking everywhere in the world central banks are fitting it.
- The Chinese economy is dependent on its management of Covid, its real estate sector and its slowing economy.
- Consumers are squeezed worldwide with high inflation numbers.
The positive data for the Spanish real estate markets are:
- property prices are not too expensive in Spain vs international real estate markets,
- mortgages rates are much lower than current inflation rates
- real estate could be a good hedge against inflation for investors.
- we see Spain having a long-term competitive hedge in this environment of high energy prices.
Why are the long-term prospects for the real estate market in Spain strong?
- Not enough properties are available on the rental market as Spain is an “Owner” country with more than 75% of Spaniards owning their home.
- With inflation rising, construction costs are on the rise and supply won’t easily come
- Most of the properties in Spain are old and some need renovation works, which means a delay to have those back on the market
- Real estate prices in Spain are not too expensive, read our quarterly report on Spanish property prices for more on that.
- With the energy crisis in Europe, Spain is one of the European countries with the lowest costs for utilities in Europe, as we told you in our article, we think that this will remain the case in the future, so, the Spanish economy should remain stronger than many European countries. This will provide strong support to the real estate market. We could even see some relocations of companies toward Spain in the future.
- Buy-to-let in Spain provides a nice return for investors.
Newbuild vs resale in 2023?
We don’t expect huge discounts for real estate buyers but yes, cash buyers should get discounts on resale projects and they should negotiate before writing an offer. We don’t expect huge discounts for newbuild – we have some special offers on newbuild properties from our partners, just ask us directly – as construction costs are higher and the Spanish housing market is healthy and not oversupplied as it was in 2008. Some regions could have more newbuild supplies which could give opportunities for buyers.
A new long-term trend favouring Spain!
Spain has many competitive edges over other EU countries:
- Low cost of Utilities: Electricity and Gas prices compare in favour of Spain vs nearly every country in Europe. Have a look at our detailed article for more on that subject: the cost of utilities in Spain is up to 75% cheaper than in other European countries.
- Spain is a leading country in terms of renewable energy: Spain has already 50% of its energy from renewable sources and wants to reach 100% by 2050.
- Qualified labour at a low cost
All those will be big edges for Spain in the long term and could transform Spain into one of the biggest economic and industrial powerhouses in Europe.
The IMF shares our view and published in a November report that Spain’s Economic growth is projected to reach 4.6 per cent in 2022 and 1.2 per cent in 2023. This put Spain one of the top-growing country in Europe.
That is why we think that the real estate market in Spain will on one end suffer from less demand from Spaniards and foreigners due to the slower economic activity in Europe. But, on the other hand, if we compare the Spanish property market to international markets, if we see where it is now, under €1,800 per square meter, and if we add the short-term and long-term advantages of Spain, we think that the Spanish real estate market will stay stronger than the European average.
For real estate investors, as we don’t see inflation vanishing quickly mortgage rates are very competitive in this inflationary environment and indexation of rents to inflation could water down inflation effects (not 100% as those are limited by the government). But, that’s not bad in a difficult economic environment.
For more on mortgage financing, have a look at our article: “Fixed or variable mortgage for my Spanish home?“
The 2023 Spanish property market forecast from our local experts
We asked our partners to give some colours to their local property markets. This is very interesting as they have knowledge of the market and see daily what is going on. Here is the feedback on Madrid, the Costa Blanca, the Costa Daurada and the Canaries. This section will be updated later on if we get more feedback. You can find all our local Spanish property hunters members of our network by following the link.
The 2023 forecast for Madrid real estate market
We discussed this with Agnes one of our local property hunter in Madrid.
Are foreigners active in the real estate market in Madrid as of the end of 2022?
Foreign buyers, especially those who have their savings or incomes in USD, have increased their demand for both investment properties and second homes in Madrid, presumably because the EUR/USD exchange rate is very favourable for them right now, and mortgage rates are still lower in Spain than in the US.
National buyers who have enough savings for the downpayment have also shown an increased interest in completing their purchase this year, as it seems very likely that interest rates on mortgages will keep going up for some time, whilst decreases in prices of properties are not certain at all.I believe that small investors who would be purchasing without a mortgage are cautious, holding off to see if there is really a recession next year and hoping they can get better deals in a few months than today.
On one hand, if mortgage rates keep increasing some buyers will not be able to buy, so part of the demand will decrease. On the other hand, if inflation rates are persistently high, people with savings will likely look towards the real estate market as a refuge, increasing demand for investment-oriented purchases. Price fluctuations will most likely not be consistent throughout neighbourhoods and property types. For example, unless there is a serious worldwide crisis, it seems unlikely prime properties’ prices will drop significantly because they might still be propped up by foreign demand and by national buyers with high purchasing power who are not stretching their budget to the limit and therefore are not so affected by higher mortgage rates.The major risk is the “unknown” factor, such as when the covid pandemic appeared out of the blue: we don’t know what we don’t know! A possible positive surprise could be the inflation petering out sooner than expected.
The Costa Brava 2023 real estate outlook
Séverine, our local property hunter in Costa Brava, gave her analysis on the Costa Brava.
What is the current activity on the property market in Costa Brava?
It is true that with the current climate, inflation, rising fuel prices, and the significant rise in interest rates, buyers want to know what the crisis in Spain really means. The crisis is undeniable and is disrupting the Spanish property market but in what way? It is quite heterogeneous depending on the type of product and the region. The big cities are particularly affected for purchases of main residences. On the other hand, the effects on the purchase of second homes are less noticeable, especially in areas that have always been in high demand, such as the Costa Brava and the Costa del Sol. We are writing this article in December 2022, and so far we have not seen any significant drop in prices. It is a very tight market due to the high demand and the limited number of properties on the market. The crisis is softening this contrast slightly, but prices are not falling and are tending to stabilise after the sharp increases post COVID (around +20% over a period of one and a half years).
What is the 2023 outlook for the property market in Costa Brava?
For 2023 we remain very confident about the market on the Costa Brava. With still a lot of demand from abroad, still mainly from Europeans, but also with the strength of the dollar, the return of Americans.
The latest purchase of Séverine in Costa Brava for one HTBIS customer?
Our latest sale is a very nice house in the chic area of s’Agaro located between Playa de aro and St feliu de Guixols. With a list price of 469,000 and a final price negotiated at 450,000 for a European family. This is a house located in a residence with few co-owners, with garden and swimming pool, ideally placed at 5 minutes walk from the beach and shops.
The objective for this family is to spend their holidays there but why not to live there in a few years. The search for a healthy and well-frequented neighbourhood was important!
Congratulations Séverine and team on this last deal, another happy customer of HTBIS. As we always say: a local property hunter means, a quicker process with fewer risks and savings.
Have a look at the full profile of Séverine our property hunter in Girona and the Costa Brava here and check the last property she bought for her customers.
Read more: the six reasons why working with a property hunter in Spain.
The Costa Blanca 2023 real estate forecast
Valérie wrote this feedback, she is our local property hunter in Costa Blanca.
What is the current activity on the property market in Costa Blanca?
Economic crises do not always have the same impact on the property market. The Costa Blanca is a very popular area for Belgians and English speakers. This area, which stretches from Denia to Horadada, offers less expensive products than the Costa Brava or the Costa del sol. Its main airport in Elche, next to Alicante, provides direct connections from the main European airports, and its well-developed rail network with direct lines from Madrid ensures a continuous flow of traffic and a certain economic dynamism. The demand comes largely from foreign investors, mainly European, but its proximity to Madrid also generates domestic demand.
What is the 2023 outlook for the property market in Costa Blanca?
We expect the market to hold up. On the other hand, we believe that there may be opportunities in the new build sector. New developments (houses and flats), particularly in the south of Alicante, have reached a certain peak in recent years and we are therefore waiting to see the movements in this property sector where real opportunities will be available over the winter. These new buildings provide interesting energy certificates, which have become even more attractive since the energy crisis, and remain secure investments.
Have a look at the full profile of Valérie our property hunter in Alicante and the Costa Blanca here and check the last property she bought for her customers.
The Costa Dorada 2023 real estate forecast
Sabine gave her views on the local market, she is our local property hunter in Costa Dorada.
What is the current activity on the property market in Costa Dorada?
Before discussing the effects of the economic crisis and the outlook for 2023, it should be remembered that the Costa Dorada stretches from the south of Barcelona to the entire coast of the province of Tarragona. Unlike the Costa Brava or the Costa del Sol, it is frequented by a majority of urban Spaniards from Barcelona, Zaragoza or Madrid who have second homes there. Here the impact of the crisis will be felt more because a majority of Spaniards have borrowed at variable rates and the sudden and sharp increase in these rates will certainly push some owners to sell their second home in order to offset inflation.
What is the 2023 outlook for the property market in Costa Dorada?
This is a market that has been very popular during the covid and a drop in prices in this sector will be all the more welcome for future buyers.
The latest purchase of Sabine in Costa Dorada for one of Howtobuyinspain.com’s customers?
Our latest sale is in L’Ampolla, in the Ebro Delta. This is a less built up and wilder area than the south of Barcelona, but still only 1.5 hours from the main city. Our clients were looking for a house to buy and to invest in, and the search was not easy as many criteria were required. In the end we found them a house with a back to back aspect, 5 minutes walk from the beaches in a quiet and well frequented residential area, with 2 bedrooms. The house is in immaculate condition and therefore needs no work inside, and the low price will allow the new buyers to build a small swimming pool to maximise rental income next summer.
Have a look at the full profile of Sabine our property hunter in Tarragona and the Costa Dorada here and check the last property she bought for her customers.
The Canary Islands 2023 real estate forecast
We want to thank Manuel our local property hunter in the Canary islands for his analysis of the property market in the Canary Islands.
What is the current activity on the property market in the Canary Islands?
Let’s remember here that the Canaries are the islands which are the most favourable for rental investment since the temperatures are mild all year round and this remains ideal for investors since the tourist season is spread over 10 months of the year… On the other hand, these islands, where the majority of the capital is foreign, will suffer more from the crisis compared to the different Spanish coasts. These islands, which depend solely on air and sea transport, will suffer a massive drop in visitor numbers when the price of plane tickets soars…
What is the 2023 outlook for the property market in the Canary Islands?
there will therefore be opportunities to be seized as this drop will be felt but will quickly rise again when the markets stabilise.
Have a look at the full profile of Manuel our property hunter in Tenerife and the Canary Islands here and check the last property she bought for her customers.
Why the Spanish property market will stay at the top spot for foreigners?
As foreigners are cash buyers 90% of the time, and even when they ask for a mortgage, most of the time it is a small part of the property’s value, so the increase in rates will have a smaller impact on foreigners but yes, foreigners will hesitate more before buying a property in a foreign country as the economic activity will be weaker in the short term.
Here are other positives that will keep foreigners active in 2023:
- Thanks to homeworking, a new major trend is active in any real estate market in the world: people leaving city centres for suburbs and second-tier cities. Relocate to Spain: Spain is one of the best countries in the world for relocating & working remotely
- Spain’s major cities compare very well with European major cities in terms of quality of life and cost of living. Discover the cheapest and most expensive cities to live in in Spain and compare them with any city in the world.
- Spain offers more space for less and so, it is easy for foreigners to upgrade from where they are now.
- All our partners, everywhere in Spain had a very busy year in 2022: lawyers, developers, property hunters,… It was really impressive.
- Spanish property prices remain very competitive vs other international markets.
- Mortgage rates remain cheap in Spain if you compare it to inflation, mortgages are much much lower and that means that it remains interesting to take a mortgage to hedge this inflation risk.
- Transactions’ volumes are strong in 2022 across all the Spanish local markets: rising by more than 20% getting back to pre-covid levels (and a little bit more).
- Activity was at the highest since 2007 and both Spaniards and foreigners are active, which means the trend is broad-based and not only in certain areas.
- Foreigners activity is back to the same levels it was “pre-Covid” era.
- Real estate market in Spain is strong: Have a look at our detailed quarterly report with all the prices’ evolution for the top 20 Spanish cities: Spanish quarterly property report.
- 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
- 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. One other move could be for people to relocate towards Spain as Spain has a much lower cost of living (even more since the energy crisis).
- The rise in raw material prices has resulted in a more than 10% increase in production costs over the last two years. This will increase the prices of the new building developments and reduce supply in the long term.
- New build properties are not in oversupply: on the contrary, it remains under control and demand was strong in 2022.
The 2023 outlook from other real estate experts
- The bank of Spain predicts a return of 10% for the Spanish real estate market
- BBVA Research forecasts a slight contraction in home sales in 2023 and a 2% price increase in Spain. “BBVA Research prevé una ligera contracción de las ventas de vivienda en 2023 y un incremento del precio del 2% en España“
- ING predicts some weaker performance for the real estate market in Spain with a decrease of -3,4%, «el crecimiento real de los precios el próximo año será negativo (-3,4%)»
- Fitch, the credit rating company, foresees further growth between 2 and 4% for Spanish real estate in 2023. In fact, Fitch expects price increases for two countries in Europe in 2023: Spain and Italy.
How to find your ideal Spanish property?
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!
Discover newbuild properties meeting those criteria from our partners or ask one of our property hunters to search for your dream property anywhere in Spain, we have a local hunter!
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 search tips for buying your Spanish property
- The 7 pitfalls of buying a property in Spain and how to save on your property purchase
- 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
Senior analyst and strategist at HTBIS
Check the full HTBIS team here
FAQ on the subject
Is it a good time to buy property in Spain 2023?
Yes, for sure, as you can see, prices are rising since 2014 but are far from the top of 2008. Returns are healthy and not excessive while financing remain low. Read more in our paper.
Will Spanish property prices fall in 2023?
There is a chance that prices will fall in 2023 but Spain will be one of the strongest real estate market in Europe. Read this article to know why.
Can I get residency in Spain if I buy a house?
It depends if you are part of EU or not and if you have enough financial means to live. If you are not from EU countries, there are solutions, have a look at our article about the golden visa.
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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!
Senior analyst and strategist at HTBIS
Check the full HTBIS team here
FAQ on the subject
Is it a good time to buy property in Spain 2022?
Yes, for sure, as you can see, prices are rising since 2014 but are far from the top of 2008. Returns are healthy and not excessive while financing remain low. Read more in our paper.
Are property prices in Spain falling?
No prices are not falling anymore in Spain. Real estate prices are rising since 2014 and remain far from the top: current average price per square meter in Spain is €1662 (end September 2021).
Can I get residency in Spain if I buy a house?
It depends if you are part of EU or not and if you have enough financial means to live. If you are not from EU countries, there are solutions, have a look at our article about the golden visa.
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]]>Real estate estimated return is back in strong positive territory
According to statistics released by the Central Bank of Spain in December 2016, the return expected on the residential Real Estate market in Spain is of 8,4%.
This performance comes from two sources: gross rent yield estimated at 4,4% and the capital gain estimated at 4%.
First real positive return since the crisis of 2008
As you can see on our chart, the estimated return became slightly positive for the second time since 2008 at the start of 2014. In 2010, the estimated return went slightly positive but it was not enough to compensate the mortgages costs. This time, the performance is much stronger as the estimated profitability of 8.4% nearly covers by more than 3 times the mortgages costs.
While the estimated profitability was slightly positive for the first time in 2010, it was not enough to compensate the mortgages costs. This time, the performance is much stronger as the estimated profitability of 8.4% nearly covers by more than 3 times the mortgages costs.
Real estate performance remains very negative on 10 years
Have a look at the comparison of the real estate market in Spain vs other European countries on a 10-year time frame
As you saw on this histogram, Spain as the weakest performance just in front of Ireland on a 10-year timeframe.
Have a look at the many reasons why we think that the Spanish market is a nice real estate opportunity right now. We bought ourselves in 2014, let’s put our money where our words are 😉 .
Another positive factor: Activity is picking up
You should take into account the increase of activity in the market by both nationals and foreigners as you can notice on this chart:
It looks like others agree with our conclusions…
Looking for an expert in Spain? Ask us directly!
Senior analyst and strategist at HTBIS
Check the full HTBIS team here
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