In a article from May 2020 Confianz discussed its expectations about corona's impact on the Spanish property market. We are now several months on. Time for a look back at the Spanish property market after corona. Glenn Janssens of Confianz told the Online SPAINFO fair about his experiences. This contribution provides a summary.
First of all: what is the Spanish property market?
We should stress that there is nothing like one Spanish property market. The Spanish real estate market is fragmented. For instance, there is a distinction between the domestic market (for Spaniards) and the international market (for foreigners). Resales and new construction are also separate markets. Finally, there are regional differences: the market in Costa Blanca is different from the market in Costa del Sol or the Balearic Islands etc. These markets have their own dynamics.
A look back: some figures
To date, available figures from the College of Spanish Notaries and the INE not significant. There were a whopping 69.90% fewer deeds in April 2020 compared to April 2019. There were 52.30% fewer in May, 20.30% in June and 2.80% in July, respectively.
Naturally, fewer deeds were passed during the lockdown. After all, notaries were often closed. The recovery in July can be explained by the restart of files prior to the lockdown.
The number of deeds executed presents a delayed picture. Indeed, deeds are completed several months after the sale. In the case of new construction, even years. The question is how effective new sales are evolving. For now, we can only base this on what various professionals tell us and what we ourselves notice in our practice.
Which factors are important?
In these contributions, we focus on the international market. This segment is the most relevant for buyers of Spanish property in the Benelux. In our view, three factors are important.
- Current interest in Spanish property
- Travel options to Spain
Interest in Spanish property
From experience, we find that demand, both from investors, second stayers, movers and renters remains high. Due to the corona crisis, these people have accelerated their plans. A quieter lifestyle, need for space and proximity to the sea have become more important. On top of this, low interest rates are interesting for both buyers (borrowing cheaply) and investors (obtaining higher returns). Interest in Spanish property remains high. We also hear this from other professionals in the market.
Travel options to Spain
So demand for Spanish property is not diminishing. However, the ability to buy is limited by travel restrictions. The colour codes and the quarantine obligation mean fewer people are travelling to Spain. Travellers from outside the EU are also still basically unwelcome.
If people cannot view homes, there is much less buying. And there are few sales per video. What we then see is a yo-yo effect. As soon as travel is possible, sales rise. Thus, we saw a spike in new filings in July and August until code red in mid-September. We suspect this yo-yo effect will play out for a while. So in the period without restrictions, sales are high and fast.
What about Brexit?
What will have an impact on the Spanish property market that cannot be underestimated is the Brexit. After all, the largest group of buyers are British; they are driving demand. The evolution of property prices will also depend on the extent to which they have easy access to the market.
What we observe from our practice is that demand for Spanish property remains strong. However, effective sales depend on travel restrictions. If people cannot travel, logically, fewer sales are made.
The negotiating margin for quality and luxury properties is limited despite corona. Only if the seller needs to act fast can good negotiations be negotiated. However, these are rare outside opportunities.
The bargaining margin for properties located in non-touristy regions is higher. Spaniards will lose purchasing power due to the corona crisis. As a result, prices are flexible.
Finally, prices for new builds remain stable. Promoters usually only have a limited margin that they cannot go below. However, you can potentially obtain interesting promotions.
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