The real estate market in Spain experienced a good period last 2021 when it closed with more than 500,000 homes sold. But what will happen now in 2022? Find out what is the current real estate situation in Spain 2022 and what can be expected from it.
2021 went very well
The Spanish real estate market experienced a record year last 2021 when it managed to sell 500,000 homes. Vaccination, historically low mortgage rates and savings generated by the low economic activity due to the health crisis, increased the demand for 2020 which was stagnant.
Looking at things clearly, the growth in demand was consistent with the recovery of economic activity after the impact of Covid-19. Although, despite being a very good year, the number of homes sold is still far from what was achieved in 2007.
On the other hand, the price of rents closed at 9.7 euros per square meter, which caused the rent to be paid by tenants to fall by 4.5%. The reality is that more and more young people prefer to buy a home rather than rent it. The prices of some Spanish cities, compared to the profitability of paying a mortgage, make people prefer the second option.
In addition, another aspect to highlight is the increase in sales and purchases by foreigners, which rose to 28.5% with numbers already very close to those of before the pandemic.
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Today’s real estate market: what 2022 looks like
2022 started well for the real estate market in Spain, as it hardly felt the consequences of the sharp price escalation caused by global supply, on the one hand, and the Russian invasion in Ukraine, on the other.
And while it is true that the real estate market continues to set records, the statistics warn of a slowdown that is normal to happen, as total transactions were 20% lower in March than in other months. However, it is believed that it is too early to draw conclusions, as Easter Week may have influenced this data.
After the quarantine, people had the need to find larger homes, with terraces; they even left the cities and moved to the suburbs. Figures from studies conducted by INE show that the large sale of homes accounted for an increase of 35.2% compared to 2020.
The same dynamism as last year is expected for 2022. However, in 2021 housing prices increased by 2.9% and it is estimated that for this year they will grow up to 4%. In this sense, the cost increase will be more marked in new homes (4.5%) compared to used homes (3.9%).
Consequently, the effort that a household will have to make to buy a home will increase from 7.2 years of gross income to 7.6 in 2021 alone. Likewise, 19% of the Spanish population lives in rented housing, which is a step back to the figures of two years ago. This is due to the late emancipation of young people and the spread of remote work due to the pandemic.
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What factors influence the stability of the Spanish real estate sector?
The Spanish real estate sector is experiencing strong price changes due to multiple factors: the global supply crisis, the war between Ukraine and Russia and the imbalance between housing supply and demand.
The economy has basic rules, one of which is that if demand increases and supply decreases, prices go up. It is possible that this scenario could play out in the Spanish housing market in 2022. As a domino effect, the prices of new homes will rise and, since people cannot afford a new home, they will look for a used one, which will cause the prices of second-hand apartments to rise.
Currently, the housing supply is not able to meet the high demand that has been generated in recent months. Studies show that 16% of the Spanish population over 18 years of age bought or tried to buy a home during the last year, which is a very large number compared to the 4% that sold or tried to sell.
In addition to all this, there is the impact of an extraordinary event: the Russian invasion of Ukraine on February 24 of this year. As a result of this, the prices of construction materials and raw materials will increase significantly. Some construction companies have even decided to pause their works because of the costs.
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2022 will be an intense year in terms of the economy and we must be attentive to the development of events. However, it is important to mention that, after the 2008 crisis, the real estate sector is better prepared. Therefore, it is expected that, in the face of a new crisis, its recovery will be quite fast.
Now that you know the current real estate situation in Spain 2022, will you be encouraged to buy your own home in Spain? And if you want to know more about current affairs in Spain, you can enter our TAS Consultancy blog and get information about news, business, entrepreneurship, taxation, etc.