With year-round sunshine, stunning coastline and a relaxed way of life it’s no surprise that Spain remains a popular destination for second homeowners and property investors.
This blog takes a look at what has happened to the property market in 2021 and pulls together the latest predictions on what to expect over the next 12 months.
Learning to live with Covid-19
The lifting of travel restrictions in June raised expectations among analysts of a gear change in Spain’s continued economic recovery, and the signs looked good with renewed interest from overseas investors.
In truth, the property market had exceeded expectations during the first half of the year with Barcelona, Madrid and the Costa del Sol leading the way. These regions saw sales of new build properties rise by more than a quarter year on year between January and June 2021.
Concerns about the Omicron variant as the year ends creates some uncertainty as the new year begins. However, Spain’s vaccination programme is going well and while restrictions will be reviewed again on 31 December, the sense is of a country returning to normal with level of interest and demand for property in Spain, including second home investors, showing no sign of abating in 2022.
Tax changes on the way
Spain’s government are considering a new law that will seek to address concern over rising rents and property prices in the housing market. The new bill, expected to become law during 2022, will ban the sale of social housing to investment funds with additional measures to limit rent increases and improve affordability.
There will be an expectation on bigger landlords to cap rents in areas where rent has risen significantly above inflation. Tax incentives will also be introduced to encourage smaller landlords to cut rental costs with penalties imposed to reduce vacancy levels.
A series of measures are also being introduced from January to counter tax fraud with a new calculation method introduced applying to all real estate transactions. While the changes will add costs they are expected to impact older real estate rather than new build developments, which makes new build property more appealing than ever for investment.
Why Spain is still the place to invest
Quality properties with terraces and balconies on the outskirts of the city with shared facilities such as a swimming pool remains the focus of Spanish homebuyers as well as overseas second homeowners and investors.
It is that demand that is helping to keep property values high, with Barcelona among the city locations seeing a shortage in availability of quality one-to-two-bedroom apartments driven by the highest countrywide level of property transactions since 2008 in the first half of 2021.
The economic outlook for Spain is also positive with The Bank of Spain predicting a 5-7% GDP increase for 2022. It coincides with increased interest from overseas buyers with the trends towards hybrid and remote working the latest lifestyle driver for buying property in Spain.
GRE Assets has been delivering high quality, well connected homes in the UK and Spain since 2006.