Spanish Real Estate Market: March-2021 News
More and more Spaniards are moving into rented accommodation, solar panels are gaining popularity and in the Balearic Islands, homes are being taken away from the rich. What is going on? Let’s see!
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!
1. Coronavirus took away a quarter of foreign purchases
As you know, Spaniards are leisurely people. And experts from the Property Registrars of Spain are no exception. Only at the beginning of March, the experts finished and presented to the world their annual report on the real estate market for the year of 2020. As it turns out, last year foreigners bought 24.6% less Spanish properties than in 2019. The exact number of transactions involving foreign buyers amounted to 47 500, which is 11.3% of all purchases.
Despite all the difficulties, 3 out of 4 planned foreign purchases took place during the pandemic.
Market experts assess this data in different ways: some experts say about the obvious decline, but others note that even during the pandemic, three out of four transactions still took place, indicating the resilience of the local housing market. The most active in the Spanish property market are the British, French, Germans and Moroccans.
2. Real estate is a good reason to fly
The popularity of Spanish property among British citizens has prompted the UK government to include "travel related to buying, selling and renting of residential property" in the list of "reasonable excuses to travel" outside the country during a pandemic. Thus, from 29 March, the UK citizens can fly to Spain for real estate transactions. However, a negative PCR test result obtained not earlier than 72 hours before arrival is still required to enter Spain.
According to the British government, real estate deal is a valid reason to visit Spain during a pandemic.
As for tourist entry, Spain plans to launch "vaccination passports" by the end of May. This was reported by Metro citing the Minister of Tourism Maria Reyes Maroto.
3. Half the country is renting
In the next few years, 40% of Spaniards will live in rented houses and apartments – such a statement was made in March by JLL consulting company. According to analysts, currently 26% of citizens of Spain live in rented accommodation. At the same time, local real estate prices are growing 2,5 times faster than local wages, so that every year fewer Spaniards will be able to afford to buy a home, even with the low mortgage interest rates.
According to the study, the uncertainty caused by the pandemic only reinforces this trend: many Spaniards, especially among the younger generation, do not want to be tied to a single property in a rapidly changing world.
4. More about rental market
If we look closely at the Spanish rental market, we can see some other trends. After the explosion of the rental market in 2020 (last September was a record – €11.4/m² per month on average in Spain), in 2021 prices began to "settle down". According to Idealista portal, during only a month in February, rents have fallen in price in Albacete (-2.9%), Castellón de la Plana (-2.6%), San Sebastian (-2.3%), Málaga (-1.4%), Valencia (-1.1%), Madrid (-0.9%) and Barcelona (-0.6%) and other major cities.
However, it should also be noted that some of the unpopular provincial capitals, which have gained popularity since the start of the pandemic, are still rising in value. These are Guadalajara (+3.2%), Tarragona (+3%), Burgos (+2.2%), Jaén (+1.8%) and Salamanca (+1.5%).
5. Time to share with those in need
Jose Mari, Minister of Transport and Housing of the Balearic Islands, signed a decree on 2nd of March on the expropriation of empty homes in favor of "social rent" for needy citizens. This is reported in the Spanish press. Under the new rules fall both individuals and legal persons who have 10 or more houses and flats. And if one of these properties is empty for more than 2 years, the Government is ready to "give them in the hands of those who need it most". Fifty-six residential units have already fallen under the new law, most of them in Mallorca. Thus the local authorities plan to mitigate the current housing crisis on the archipelago, as well as to "encourage owners not to keep the apartments closed and sell them on market".
Real estate in the Balearic Islands is one of the most expensive in the country (also due to foreign demand), putting locals in a tough situation. On the picture is the island of Mallorca.
The government is prepared to compensate owners for the temporary inconvenience and pay an average of €382 per month for such "forced rent", which is about a third below the market price. Several individuals and companies have announced their intention to sue the Spanish government, and the Homeowners' Association said it is "an attack on the right to private property enshrined in Article 33 of the Spanish Constitution".
6. Solar boom
We are witnessing another wave of popularity of solar panels in Spain. According to Idealista, thanks to advanced technology the installation of the necessary equipment has fallen in price by 70% over the past 10 years thus becoming affordable to the population. Currently, the cost is estimated at €600 per sq m. The installation of solar panels on an average chalet will cost around €11,000, but will save €45,000 over 25 years.
What roofs are best suited for solar panels? According to experts, there are several criterias. They include the orientation of the house to the south, a roof pitch of 15 to 45 degrees, a flat topography and the absence of shadow (from trees or neighbouring buildings).
7. Everything's gonna be alright
The auditing giant Deloitte made a positive forecast for Spanish property for 2021. Thus, experts predict growth of investment in Spanish real estate sector by 32%. Analysts expect that this year the sector will get an investment of € 11.5 billion, so the market will return to the "pre-covid" rates. According to the experts, not only the housing sector, but also the hotel business and sales of offices and parking spaces will recover.
View of the city from the newly built office in Barcelona
The main positive factor, experts say, is the start of vaccination (about 5 million people were vaccinated in Spain at the beginning of March) and positive expectations from the tourist season.