With home sales of about , units per year from to and completions of just 51, annually, it is believed that the housing glut has been finally corrected. In fact, some allege there is now a growing housing shortage. However construction activity is slowing again, after reaching a seven-year high in In November , the average mortgage rate in Spain was 1.
However, there has been a continuous decline in the share of adjustable rate mortgages in recent years. Despite ultra-low interest rates, the Spanish mortgage market continues to shrink. It contracted to about New home mortgages increased by a minuscule 0. Average apartment rents in Spain rose by 2. By autonomous region, Cantabria recorded the highest rent increase of In contrast, La Rioja 1. In March , a new government decree regulating rental dwellings in Spain went into effect, in an effort to limit rent increases and expand tenant protection and rights.
Among the major changes, the measure caps annual rent hikes at the rate of inflation within the contract period; extends the duration of the rental contract from 3 years to 5 years or 7 years if the landlord is a business entity ; and introduces a state benchmark index for rental prices that will be used to gauge the current state of the market. The new law will be applied to new lease agreements signed on March 6, onwards.
In January 23, , Spain became the second euro zone country to exit its international bailout program, after Ireland. The Spanish economy has consistently outperformed much of Europe since. However, it has been a long, hard slog. The economy shrank by 1. In , the economy grew by a meager 0. The European Commission is even more pessimistic, projecting the Spanish economy to grow by just 1.
Spanish unemployment fell to The total number of unemployed is 3. Inflation is expected to remain low at 1. Spain narrowed its budget deficit to around 2. The deficit is expected to fall further to 2. I know it might be quite early to tell but do you have any data about how the Spanish housing market is standing after Q1 and the COVID lockdown effects?
Login or Register to submit a comment! In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours. Thanks for signing up! To complete your registration, please click the verification link sent to: If you do not receive an email within 15 minutes, please check your spam folder or contact us for help. Cantabria welcomed just buyers from overseas in this period while Extremadura was the lowest with Then ask where the majority of those overseas purchasers buy for the explanation.
And the same patchy recovery pattern occurs within regions as well. And the same holds true for other regions as well. However, in the introduction to this report I highlighted the fall in the number of overseas buyers in the first half of Unscrambling the statistics shows 51, foreign nationals bought a property in Spain, compared with 53, in the same period in , On the other hand, when the first half of is compared with the second half of , the foreign buyer total actually rose by 2.
The decline in the Balearics is a bit more puzzling. One reason might be high prices. Also, Mallorca, the main market of the Balearics, has introduced very restrictive tourist rental laws and these may be responsible for the fall in overseas buyers. Although not buy-to-let investors as such, many overseas buyers are keen to cover running costs via rentals when not in residence.
In spite of so much negativity on the part of many commentators and market analysts, almost willing the British market to collapse to back-up their argument, it is proving remarkably resilient. The Germans were in 3rd place with 3, In market share terms the British made up However, these top 3 players all registered falls compared to the same period in There were In fact, there were only two groups from EU countries that increased, Ireland up 1.
Nevertheless, some nationalities showed strong growth but they were all non-EU citizens. Argentinians and Ecuadorians rose Buyers from the US rose Although there were fewer buyers from overseas spending per square metre was up in the most numerous nationalities. The Norwegians went mad and increased average spend per square metre by Only the Irish, Italians and Danes spent less than the same period in But the real big spenders in were from the US.
So, is the overseas market in Spain slowing down? Is demand falling? Is the supply side getting too big? Have prices risen too fast? Lots of questions and several answers, I think. In the case of the British, I think currency weakness is partly to blame. If sterling strengthens throughout I think British buyer numbers will increase once again. However, I think there are other factors at play in the overseas market. In fact, I would go so far as to say that demand held up very well throughout , lots of people still wanting to buy a property in Spain.
For reasons I have never quite understood, foreign buyers are like moths to a flame if new-build is available, even when the location is inferior.
The fact is there is very little raw building land available in the very best locations, it was built on years ago. Consequently, it follows that much of the new-build activity is not in prime locations. However, since the recovery started the supply side of new apartments and houses lagged way behind demand. Inevitably, this imbalance skewed new-build prices, to an extent I believe was unsustainable.
New may be nice but is it worth paying double, or even more, per square metre than a resale? However, as more new-build projects come on stream, and the signs are that the pace is picking up, I think new-build prices will come under pressure.
I predict buyers who purchased in early phases of some new developments will find their property is worth less than they paid by the time they get the keys. In fact I think some buyers are paying such inflated prices for new build properties that they may never see a return on their investment no matter how long they hold it. At the height of the building frenzy in Spain approved building licences for , units. This figure was more than the UK, France and Germany combined.
In reality, the construction industry was more or less wiped out. Nevertheless, building licence approvals have grown year-on-year since The final total will be published in Spring Meanwhile, although Q1 and Q2 figures indicated a slowdown numbers picked up again heading into Q4.
With two months still to count in , 91, permits had been authorised across Spain. However, the biggest increases in new permits are in the Mediterranean coastal regions, precisely those locations favoured by overseas buyers.
So the cranes are not spread evenly across Spain but are clustered in just a few regions and in just a few places within those regions. The same regional imbalances I highlighted earlier with regard to transaction numbers is duplicated in the construction sector. As the supply side improves one would expect prices rises to moderate even if demand holds steady. On the other hand, if demand is actually falling, then new-build prices will be under serious pressure.
One thing for sure, no developer goes into a project expecting prices to fall during construction. The assumption is always that prices will rise phase by phase. I think will give some of them quite a shock.
Already, there are rumours circulating of developers delaying the launch of new phases as sales slow. Lack of well-priced, top quality properties in prime locations is also a feature of the current resale market. However, available stock is more in balance with demand. In my experience they are much more likely to walk away than overpay. Look hard and there are still good deals available. However, I have a problem with many asking prices.
I feel sellers assume that just because new-build prices have gone through the roof they can ramp up their asking prices to similar levels. That assumption is incorrect in my view. As I started a search for a client at the beginning of I noticed that every house under consideration had been reduced from the original asking price. When over-optimistic sellers reduce asking prices to more in line with what the market can stand, they sell.
And in price per square metre terms that will be way below new-builds prices. Marbella, the sixth most expensive town in Spain, is a good example of the new-build versus resale price conundrum. At the start of a client was negotiating to buy a detached villa. With 5 bedrooms, m from the beach, walking distance to town, and with the contemporary look that is so in demand.
Also at the beginning of I located a 2 bedroom townhouse, fully renovated to the highest of standards. However, it too had reduced from the original asking price before a buyer emerged For the same clients, I have just added a beachfront apartment to the short list.
When I am researching the market for my clients I always do the price per square metre calculation to help me come to a conclusion about the asking price. I told him it was a bit late for that, the time for price comparisons was in , not The fact is, shiny new stuff never trumps location.
Seems the developer has licence problems. However, buyers are already paying more than that per square metre just to get their hands on a new property. However, in my view that will be because new-build prices retreat, not because resale prices increase markedly.
There is a close link between rental yields in Spain and the health of the Spanish tourism sector. Currently, Spain is the second most visited country in the world.
Obviously, some will have their own homes, or stay with family and friends, but that leaves a serious number of overseas visitors renting privately. As a result, rental yields make letting a property in Spain an interesting option.
There is high demand for both long and short term rentals. What used to be considered luxury items, such as free wifi, flat screen t. There is just as much demand for smart two bedroom apartments in the right location.
I thought property price rises would squeeze yields. In all cases, location and interior finishes are key. It seems likely that demand for short-term holiday rentals is only going to increase. In , just before the global meltdown, Spain welcomed 59m overseas visitors, an all-time record.
At the end of the annual total had fallen to However, a decade later, the statistics show the 83m barrier broken for the first time. In fact, at In April , the average mortgage rate in Spain stood at 1. Now this is turning around. Mortgages totals are still falling because of the large downturn in new grants during the crisis. In , the Spanish mortgage market contracted to about Average apartment rents in Spain rose by 3.
Rent increases were seen in almost all regions. In Barcelona, the average rent stood at EUR In Madrid, rents also increased 6. Gross rental yields in Spain are slowly recovering, according to Global Property Guide research conducted in July Yields are still not high enough to make buying an apartment attractive from the yields perspective, but are better than previously.
The gross rental yield for apartments in Barcelona ranges from 3. In Madrid-suburbs, rental yields range from 4. This year, housing glut is expected to fall to under , homes, according to APCE association of property developers.
The degree of overbuilding can be guessed at by looking at the number of housing starts from the National Statistics Institute INE :. In January 23, , Spain became the second euro zone country to exit its international bailout program, after Ireland. The economy grew by a healthy 3. In the first quarter of , the economy advanced 0. It has been a long, hard slog. The economy shrank by 1.
In , the economy grew by a meager 0. At the height of the housing boom in , housing investment was no less than 7. The construction industry became a key employer of low-skilled workers.
In June , consumer prices fell by 0. Annual inflation is expected at 0. Spain narrowed its budget deficit last year to 5.