Housing market in Spain recovering after pandemic downturn

by Deborah Cater
Housing market recovering
del canto chambers 2

Official data shows the housing market in Spain, which was in a ‘deep hibernation’ during the most intense period of the pandemic, is recovering. This is according to the figures for the month of July, published by the Spanish statistical office, INE.

For the first time in 13 years, there were more than 50,000 transactions in one month, an increase that can be attributed to the lockdown. According to the latest data from valuation company UVE Valoraciones, there are large differences within Spain.

For example, the figures for Santa Cruz de Tenerife, Alicante, the Balearic Islands and Málaga are nowhere near the level they were before the pandemic. In the second quarter of 2021, it was 18 provinces below pre-pandemic levels , almost a third of Spain as a whole. In Tenerife, the difference in purchases and sales compared to the same period in 2019 is -25.45%. For Ceuta the difference is -21.4%, in Alicante -16.6% and in the Balearic Islands -13%.

Correlation with tourism

Another conclusion from the study is ‘the provinces that normally receive the most tourists, especially foreign ones, have more problems reaching pre-pandemic levels’. That is not surprising ‘if we consider the tourism sector has been one of the biggest victims of the pandemic’.

This also applies to Castellón, Málaga, Las Palmas and Huesca, which suffered a decline of between 3% and 12%. Provinces traditionally more dependent on domestic demand, such as Cáceres, Huelva, Lérida, Zaragoza, Zamora, La Rioja and Córdoba, on the other hand, saw an increase in purchases of over 20%. Leading the way are Ciudad Real and Palencia, with increases of over 30%.

The country’s two largest housing markets, Madrid and Barcelona, showed growth of 14.6% and almost 3% respectively. In total, 34 provinces have returned to their pre-pandemic levels.

C&D Solicitors

Is housing recovery real or still a utopia?

According to UVE Valoraciones president Germán Pérez Barrio, the nationwide figures would indicate the recovery of the real estate sector is a reality and housing transactions have only picked up during the most severe year of the pandemic. ‘Extrapolating the data by province shows us that the reality is far from this interpretation and there are areas in Spain where talk of recovery is still a utopia’.

The official information available shows the number of real estate transactions in the second quarter of 2020 fell by more than 42% compared to the months of April and June 2019. This year -until March- shows an upturn of almost 5% compared to 2019. How the market will perform in the second and third quarter of the year remains to be seen. In these months, there were fewer mobility restrictions and more savings.

Real estate effort

Pending reliable data for the last few months, one of Spain’s best-known companies in the sector, Sociedad de Tasación, reported the trend for the third quarter. The publication shows how the real estate effort, measured by the number of years in which a person would have to spend his entire salary to be able to buy property of average value, has risen to its highest level in five years. Between July and September, an average citizen would need to set aside 7.7 years of salary to buy a house. 

Stabilisation

According to Sociedad de Tasación, the average price of all new and used homes rose 0.1% in these months and the average price per square metre was €1,682 in June. In the first half of the year, growth was 0.4%, and there is cautious talk of stabilisation.

Gesvalt, another party in the sector, published an increase in house prices of 3.9% between July and September compared to the same months in 2020. This consolidates the upward trend in prices over the past four quarters, with a national average of €1,441 per square metre. Gesvalt’s experts also predict that property prices will stabilise over the next 12 months.

You may also like