Spanish Real Estate Market: February 2021 News

The VirtоPrоperty editorial team continues to follow news on Spanish real estate market. If you are interested in the latest statistics and analysis of the Spanish property market – welcome to the new edition of our traditional column!

Spain's National Institute of Statistics (INE) has calculated local property transactions for 2020. According to the report, 415,478 villas and apartments were sold last year in Spain. This proves a 17.7% drop compared to 2019 and a return to 2016 levels (with 405,385 transactions recorded then).

The biggest losers in sales were the Balearic Islands (-23.2%), the Autonomous Community of Valencia (-22.1%), the Canary Islands (-21.9%), Madrid (-21%) and Navarra (-20.9%). According to experts, if the Covid-19 pandemic ends this year, sales numbers will return to their usual levels.

Surprisingly, a small but unexpected increase can be noted on the Spanish resale market. According to Idealista, 1 sq m of second-hand housing in Spain in January 2021 was estimated at €1,786/m², which is 1.6% more than in January 2020.

The highest prices for resale homes are still in the Balearic Islands (€ 3108/m²), which is one of the main reasons for the decline in the number of transactions. At the other end of the list are Murcia (€1051/m²), Extremadura (€932/m²) and Castilla-La Mancha (€869/m²).

Barcelona's authorities are preparing a ban on short-term letting in the city, as reported by Bloomberg. In August 2020, local authorities introduced a temporary ban on accommodation rentals in the city for less than 30 days. Now, if the bill passes public hearings and the City Council approves it, these restrictions will become permanent.

Thus, the authorities of Barcelona are trying, in their words, "to fight back" vacationers who book apartments in the city for a weekend via Booking or Airbnb which "irritates locals and provokes a rise of food prices".

The main initiator of the restriction is the mayor of Barcelona, Ada Colau. Since 2011, only apartments with tourist licence can be rented out for short-term in the city. In 2014, the issuing of licences was stopped. In 2018, an ID number system for landlords was introduced, making it possible to track violators quickly.

If you imagine that in one day absolutely all Spanish villas, apartments, townhouses and so on are put up for sale, the total price will be about 4.1 trillion euros, as reported by Idealista.

The biggest parts of that amount are in Catalonia (791 billion), Madrid (719 billion), Andalusia (619 billion), Valencia (419 billion) and the Basque Country (258 billion). And the "cheapest" regions in terms of total housing costs are Cantabria (55.5 billion), Navarra (53 billion) and Rioja (24 billion).

As we all know, 31 December 2020 opened a new chapter in the history of Brexit, so now the EU's economic ties with the UK have changed. This can also be noticed in the real estate sector. So, Brits will now have to experience some advanced-level bureaucracy to buy properties in certain locations.

It is a question of strategic and military zones in Spain: near Gibraltar, Cadiz, Cartagena, on the border with Portugal, part of the Galician coast, as well as some areas of Torrevieja and the coast of Orihuela Costa. British citizens as well as other foreigners (outside the EU) will now have to apply for permission from the Spanish Ministry of Defence to buy a property in mentioned places. This can take several months, and the answer is not always affirmative.

Due to the lack of tourists in Mallorca, poverty has risen sharply, as declared by Deutsche Welle. Tourism brings in about 75% of the island's total income. And in recent years, as the flow of holidaymakers has become even more massive, the prices of local accommodation and some services have increased tremendously.

According to the report, islanders began leaving their homes and moving into tents along the streets. Many are "barely making ends meet, spending their last savings". In 2020, Balearic citizens were moving from rented flats (around €800 per month) to rented rooms (around €300).

American rating agency Standard&Poor's (S&P) has released a new forecast for the European housing market. According to the experts, only the UK (-2.3%) and Italy (-0.5%) among Western European countries will show negative figures in 2021. "Significant growth" is expected in Germany (+5.3%), the Netherlands (+5.2%) and Sweden (+4.5%) and "moderate growth" in Belgium (+1.8%), France (+1.5%) and Spain (+1.4%).

Analysts note, however, that much will depend on the opening of international borders and the flow of tourists this season. S & P experts also expect that after the "victory over Covid-19" the demand for housing in European metropolitan areas will increase.