22 juny, 2021
What will Spain’s new real estate market 2021 look like post-covid?
What is the forecast for the rest of 2021 post-covid?
More than a year after Spain’s initial lockdown, the future is beginning to appear brighter. Now with about 34% of the population vaccinated and tourism on the rise again, it is likely that the real estate market will experience a boom in the foreseeable future. Indeed, the number of foreign tourist arrivals in the country rebounded to 630’647 in April of 2021, up from a record low of zero arrivals in April of 2020 after border closure due to lockdown. According to the Ministry of Tourism, around 35% of overseas visitors do not stay in hotels, with a large number renting privately. In fact, a report from the Spanish Institute of Statistics concluded that there were 321’000 properties for short-term holiday lets across the country, and close to 57% of these are located in Cataluña, Comunidad Valenciana, and Andalucía. Thus, the demand for short-term rentals in Cataluña will undoubtedly rise along with the expected increase in tourism in the second half of 2021. With the future appearing brighter and the era of post-covid coming closer and closer, we at Casamona see the coming year as a unique window of opportunity for investors seeking historically low interest rates, favorable lending conditions and remarkable property prices.
What is driving current buying opportunities in the real estate market?
The increase in foreign demand will not be the only driver of the real estate market recovery; with an average of 25% of household income having been saved in the Eurozone over the course of the pandemic, the delayed demand in the Spanish sales market will be filled with purchases from these increased savings. In this scenario, real estate buyers will have excellent buying opportunities and benefit from current low prices due to the crisis. However, this is only envisioned to remain the case until the full effect of nationwide vaccinations are felt and travel picks back up to pre-pandemic levels. Prices will likely rise as the economy returns to normal in the Covid recovery of 2021-2022 and inflation edges higher. However, policymakers are expected to keep interest rates low to secure the recovery, and mortgage rates are projected to remain structurally low to support the market growth of the next few years.
Why is now the right time to buy?
For those who have been thinking of buying a property in Spain in the last couple of years and wondering if 2021 is the year to do it, the lower prices provide an opportunity to secure a property that may have previously been over-budget. Banks are offering very low interest rates with high loan-to-value ratios (60%-100%), and the opportunity window is only temporary, as everything will depend on how fast social and economic life will return post-covid. Interest rates have been kept very low in Spain by the European Central Bank; they were at 0.52% in May of 2021, compared with 0.74% and 0.87% in May of 2020 and 2019 respectively. Since their lowest rate of 0.04% in December of 2020 the rates are beginning to rise again incrementally, so it would be wise to look into investing in properties before the rate of interest climbs any higher. If you are not able to come to Spain in person to visit properties, it is not imperative that you wait for travel restrictions post-covid to ease further; Casamona offers virtual house visits which can allow you to act quickly on the best properties before more foreign buyers flood back into the market.
So what sorts of properties are in demand, and how have housing trends changed over the past year and a half? The home office trend has made buyers more flexible on location, and the most sought-after properties tend to value natural light, a convenient working area, and a balcony. Before the pandemic buyers tended to prioritise living close to work or near a public transport connection, whereas today more are opting for larger properties away from the immediate center. Casamona’s portfolio focuses on these in-demand features, such as private terraces and balconies, beautiful views, and spacious layouts. Check out these Casamona properties with terraces or have a look at our services if you are interested in the current buying opportunities of the season.
What is incentivizing foreign investment into Spain?