Towards the end of 2021, we took a look at how the Spanish property market was faring as a location for second homeowners and property investors. Our blog post identified how the easing of travel restrictions aided economic recovery, how there was a possibility of tax changes and what factors were proving popular among buyers and investors.
As we progress further into 2022, there has been speculation that Spain is heading towards a housing bubble, which is when increased demand and low supply reaches a point of collapse. While we don’t believe the Spanish property market will reach this point, we take a closer look at the main factors influencing performance.
Property performance in 2021
According to the Financial Times, “investors piled a record €359bn into European property last year, targeting homes and warehouses as they pulled back from offices and shops which have been hit hard during the pandemic.” This shows that housing has proved to be a more compelling investment option, with build to rent opportunities especially popular.
Spanish home sales in November 2021 were at its highest for 14 years, sitting just below the record year of 2007. Housebuilder Taylor Wimpey has supported this by revealing it experienced its biggest reservation numbers in its 64 year history of building homes in Spain in the latter half of 2021. While this could signify supply issues, the Higher Council of the Board of Architects of Spain revealed that housing starts in Spain were up 23% last year, showing new build property as the answer to help compensate for increased demand.
There has been concern about the impact Brexit will have on the ability of British buyers looking to buy a second property in the Spanish sun. For instance, some Spanish banks offering mortgages will only lend 60% LTV for those not earning income in euros. While this could be an obstacle for some, Spain’s golden visa makes things easier as it allows people to live and work in Spain as long as they invest €500,000 in real estate, providing an incentive for international buyers to invest in property in Spain.
Recent reports have shown that international investment in Spanish property has returned to pre-pandemic levels, “representing 12.6 percent of the total number of purchases in the fourth quarter of 2021.” British buyers have also taken back over from German buyers as the main foreign buyers in Spain.
New-build property proving popular
Spanish real estate company, Realista has revealed that “new-build properties are the star performers in the sector” in terms of price growth, which is positive news for those considering investing in new Spanish property. Experts predict 2022 performance to mirror how the market performed in 2021 with continued price growth.
It is believed a change in lifestyle trends brought on by the pandemic has contributed to this increase in demand, as they provide the ideal combination of space and a high quality finish. That said, ‘terrazas’ and the provision of outside space have always added value to property with it reported in 2017 that “properties with a terrace sell for 36 percent more than similar sized homes without one.” GRE Assets has championed this across all of its residential projects in Spain, most notably Brises Diagonal Mar, which offers its residents spacious terraces, a communal swimming pool and a rooftop solarium.
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.
Date: 9 February 2022