Madness at the housing market in the province of Malaga and Costa del Sol

by Lorraine Williamson
housing market Malaga

MALAGA – Due to the continued arrival of (international) national investors and the desire of many to change homes after the pandemic, 54% more homes were sold in the first quarter than a year ago. This is shown in the housing market in the province of Malaga.

The madness to buy a house in the province of Malaga has started. In the first quarter of this year, 11,165 transactions were conducted in the province. That’s a 54% year-on-year increase and the highest figure since 2007. This was the last major fiscal year before the property bubble burst. 

124 houses were sold per day 

In the first three months of this year, 124 homes were sold per day, according to data published Friday by the National Bureau of Statistics (INE). Both the second-hand market and the new-build market experienced significant growth. Last year 5,172 sales of second-hand real estate were signed and this year there are already 8,510, 65% more. 

The province of Málaga will account for a third of home sales in the whole of Andalucia in the first quarter of 2022. This is followed by Seville with 6,163, and is fourth in Spain behind Madrid (22,467), Barcelona (16,446) and Alicante (12,163). 

Málaga and Alicante lead in home sales to foreigners 

Málaga also shares with Alicante the fact that both lead the sale of houses to foreigners across the country. Moreover, they’ve been doing it for years and the trend continues. 

Why this strong revival? 

Violeta Aragón, General Secretary of the Association of Builders and Promoters of Malaga (ACP), attributes the strong rebound to two reasons. The first is that many people from Málaga, due to the pandemic and the lockdown, decided to change their homes. They started looking for another house with more outdoor space, a swimming pool, balcony, or terrace. Perhaps, instead of the apartments, in which they felt very confined during the lockdown. 

“After the pandemic, people value their place of residence more. And see their housing not just as a place to sleep,” explains Aragón. 

The second reason, according to the general secretary of the ACP, is that “Málaga is in the crosshairs of many national and international investors for various reasons”. Numerous companies, especially technology companies, with many employees who need a house to live in temporarily or permanently, come to Málaga. 

Telecommuting

In addition, due to the pandemic, telecommuting has now become an option promoted by more and more companies, allowing many people to live in Málaga while working for a company located many thousands of kilometres elsewhere. 

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On the other hand, Málaga remains an important destination for both residential and short-stay tourism. In the first case, foreigners buy houses to spend long periods on the coast or for retirement. In the second case, more and more companies are buying houses and entire buildings. Furthermore, they plan to refurbish and market them as a tourist or long-term rental properties. An example of this is Casavo. This company has several investment funds behind it and has announced that it has €10 million available to buy apartments in different areas of central Málaga. The intention is to renovate it and sell it for a higher price. 

“Housing is one of the great havens for investors and there is a lot of pressure in Málaga,” emphasises Carlos Rueda of real estate portal Idealista. He adds that he speaks to many project developers from Barcelona or Valencia who notice that the municipalities there are starting to create obstacles to construction, so they are shifting their course to Málaga. 

Price at maximum level 

The number of sales increases and with it the price. At €2,551 per square metre in the province, this is now at the maximum level. It is 10% more than a year ago. 

In April, the historical maximum price was reached in 17 municipalities: the city of Málaga (€2,225 per square metre), Alhaurín de la Torre (€1,790), Benahavís (€3,818), Benalmádena (€2,424), Cártama (€1,568), Casares (€1,968), Estepona (€2,542), Fuengirola (€2,595), Istán (€3,704), Manilva (€1,861), Marbella (€3,581), Mijas (€2,245), Monda (€1,582), Ojén (€2,696), Rincón de la Victoria (€2,072), Torre del Mar (€2,074) and Viñuela (€1,792). 

New bubble? 

Could we be dealing with a new bubble? Violeta Aragón doesn’t think so because the bubble was financial at the turn of the century, as banks gave all kinds of facilities to buy a house and finance it even above its value”. Now the situation is different. The bank gives at most 80% of the amount of the value of the apartment and that requires the buyer to contribute at least 20% deposit. 

Young people offside 

Translated into euros, such a down payment is a fortune, about €60,000 on average, and not everyone has that. Two groups emerge those who can buy and those who cannot. And the latter are mainly young people, who are light years away from their emancipation. “Solutions have to be found for young people because under the current conditions prices will continue to rise for a while,” says Aragón. 

Renting is also becoming more and more complicated because the rent has also skyrocketed – sometimes the monthly costs for renting are higher than with a mortgage. Young people only have access with the help of their parents or when they share an apartment. 

Related article: Pandemic fuels euphoria on Spanish housing market

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