Pandemic fuels euphoria on Spanish housing market

by Lorraine Williamson
Spanish property market

In 2021, 565,523 homes were sold in Spain, which is 34.6% more than in 2020. The number of transactions in the Spanish housing market has not been this high since 2007. The aftermath of the pandemic led to this growth.  

The figures were published on Tuesday by the Spanish National Institute of Statistics (INE). The statistics show that purchases and sales have not only exceeded 500,000 transactions but have also shown the largest annual increase since the boom of the previous decade. However, the percentage is distorted by the pandemic, which caused sales to plummet by 17% in 2020. Before that, the market already recorded a mild decline of 0.7% in 2019, when the economy started to slow down. 

Pandemic impact 

‘Statistics show that the pandemic has accelerated Spaniards’ drive to buy their own homes. They were driven by low-interest rates and historically cheap mortgages. Also, the high savings rate made more Spaniards decide to invest in real estate’, says a spokesman of the real estate portal Idealista, Francisco Iñareta. 

Far from property bubble 

According to his analysis, the data for 2021 ‘shows strong demand in the second year of the pandemic’, although he does rule outreaching the levels of the property bubble, as the figures are still 27% lower than in 2007. Nevertheless, institutions such as the Bank of Spain are closely monitoring developments in the property market. In the EU, the European Systemic Risk Board last week warned of the risk of property bubbles forming in a total of 24 countries, although Spain was not one of them. 

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‘We will remember 2022 by the great property boom that was sparked by the pandemic. It is very positive that market activity continues to increase; this means that citizens value housing highly. It also shows that the interest in buying is still present in society. But the most positive thing is that, even with maximum demand, the price increase is contained. That makes it a great time to buy a property,’ adds María Matos, director, and spokesperson for Fotocasa.  

New and existing houses 

The increase in transactions in the Spanish housing market in 2021 can be attributed to the increase in both purchases and sales of existing homes, which rose by 33.8% in that year, and the increase in sales and purchases of new homes by 37.7%. The average price of homes was €1,823 per square metre in 2021, an average increase of 3.9% compared to 2020 (4.2% in the case of used homes and 2.9% in new homes). 

Differences per region 

The regions with the highest increases in home sales and purchases, according to INE data, were La Rioja (+42.7%), Andalusia (+42.5%), and Cantabria (+38.0%). The Basque Country (+15.8%), the Canary Islands (+22.0%), and Asturias (+23.5%) showed the smallest increases.  

More reading: Foreigners are again buying as many houses in Spain as before the pandemic. 

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