I will look at prices and my concerns about the amount of new construction in the pipeline. It seems that it's either feast or famine in Spain's property market. Market view. info. Average price1, €/month. +34 € + % from 25/05/ Price per m2 Number of properties. 2, The report found that the rental prices have increased at a “significantly” faster rate than housing costs. The rising cost of rent is hitting low-income.
There are many articles in the press in the last two years about the adventure of hiring a rental without being lifted in less than 24 hours, or with owners who ask for unassuming amounts of bail for the majority. They also point out that the statistics of the Ministry are incomplete because of the huge amount of rent in black that exists, and that logically it is not included in the report of the ministry but that it can be seen in the Idealista or Fotocasa ads.
But, as sources in the sector point out, Idealista's average is also falsified. The portal averages the active ads on the page, and does not take into account the entire volume of floors at an excessively high price but that is not placed. These ads for immovable expensive apartments increase the average price of the square meter of each city.
The same price increase causes the luxury flats of the big cities, which normally remain longer offered until they find a buyer. In the case of Development it would be interesting to have both an analysis of monthly prices instead of annuals and by cities instead of provinces.
It would also be very useful to have the median rent in an area, and not simply the average. Idealista could also include the latter statistic to his monthly publications. In reality there are very few people, on the total rental housing, who deposit the bonds in public bodies.
Contrary to what people think, in the housing market there is no more demand when the price is lower, but the other way around: there is more demand when the price is higher. Both in the purchase and in the rent. This works like this, if I have an apartment and I see that the floors are low, I don't put it on rent because my profitability would be very low and I'm not interested. I would put it on rent when it is higher.
Therefore, these portals are interested in both the purchase price and the rental price being very high, so that people are encouraged to buy or rent, and that is why their commercial activity grows when demand is on the rise and not at reverse. So yes, they are interested in heating the market.
There is very little information, and this market is especially opaque because there is a lot of money in black. For example, and according to a study prepared by flats. According to another survey for the INE , the percentage of households that live on rent already reaches a peak of Only from there and with an official registry of rental prices such as the one that already exists with the sale of real estate could the relationship of the average or medium rental price in each region be assessed with their salaries to know where it is more urgent to build public housing for rent or carry out some other type of public policies.
This article was written and published in Spanish and has been translated into English via Google Translate. 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 There are also signs that improved marketing to pitch Spain as a year-round destination is paying off. In the three winter months, January through March, showed the biggest monthly increases while the three summer months were either flat or decreased slightly.
This indicates there is improving rental potential throughout the year and not just in the traditional high season summer months. Analysis of the tourism statistics indicates that the decline of foreign tourists in high season was the result of the recovery in cheaper package-holiday destinations such as Tunisia, Morocco and Egypt rather than fewer high-end tourists.
And the very high demand for the most expensive rental properties seems to bear this out. The most important thing, in my view, is that there are no losses at the top of the market. It is vital that the quality sector continues to grow.
When I am working for a client whose brief requires reliable rental income I target certain areas and ignore others. In addition, I search for a type of property and reject others. Get the location wrong, even by just a few kilometres and income may be halved. As well as pinpointing the right location in a particular area you need to be in the right region because some have legislated against short term holiday lettings, pressured by the powerful hotel lobby and disgruntled locals.
So, if rental income is a requirement of your buying plan then check the legislation in that autonomous region because there are differences. But the days of leaving a set of keys at the local bar and crossing fingers that no emergencies will arise are over.
My blog here explains more. Obviously, the principle reason for this is that Spanish banks were drowning in bad debts and new mortgages were scarce. Only a massive bail-out from the European Central Bank prevented widespread collapse. One of the first questions I ask potential clients is whether they they are cash buyers or if they need finance.
I do this because I believe it is better to get an indication of borrowing potential before I start a property search. When the answer comes back that they are cash buyers I always ask if they are aware of the fixed rate mortgages currently available in Spain. Most are not. However, once they knew all my recent clients who had intended to buy with cash have opted to take the maximum they could borrow. Euribor is the interest rate which fixes most Spanish mortgages and it has been in negative territory since February After falling month on month throughout it closed the year slightly up from the historic low of It now stands at In the recession fixed rate mortgages disappeared from the market.
Indeed, the majority of international buyers are opting for fixed rate over variable rate loans. My advice to cash buyers, irrespective of the currency, is to protect their capital and take a Spanish mortgage. There are many products to chose from with fixed terms from 5 — 25 years, interest rates from 2. There are a lot of variables, such as country of residency, amount required, location of purchase.
However, there are no restrictions on nationality or purchase price. A good broker is essential. Status is scrutinised very carefully but in general the process is straightforward and quick. In the case of some of my clients we have even had banks competing for the business. It noted that Spanish banks are highly exposed to real estate sector developments and may underestimate the speed at which house prices and relaxed lending criteria can gain traction.
Also in December , I noted warnings from valuers about the spectre of overvaluations creeping back into the market. The loan is then offered on whichever is lower, the valuation or the property price. They may be only a warning flag but they may also be the first signs of something more serious.
Even more reason then for buyers to be very cautious, particularly in the new-build market. It is essential to do the research and compare asking prices for new property with comparables in the resale sector. Look at peak prices prior to the crash and ask yourself if you should be paying even more than that now. Lots of soft focus life-style images, very seductive, but better to check the price per square metre and ask if it makes sense.
However, if you buy at the right price, Spanish property is still relatively affordable. The sun continues to shine and the quality of life is rated one of the best in the world. The lack of high-quality inventory at the right price in prime locations will be an issue throughout As far as the overseas market is concerned that means the Mediterranean coasts, the Balearics and the Canaries. My advice to buyers in is do not obsess about new-builds, especially if not located in prime positions.
Many are not. Consider equivalent resales, calculate the price per sq. Then you can take an informed view on what makes the best financial sense. The result will almost certainly be a lower price, a bigger property and, most important of all, a superior location. A thorough search can still uncover some real deals although they will be harder to find in Nevertheless, there will always be some sellers more motivated and realistic than others.
If there is a mobile mast in view assume there will be more as the tendency is for them multiply. Electricity pylons are also a big no-no. We can assume new housing will increase in the medium term. Already, in some areas I can count twenty cranes while standing still. If there is vacant land nearby find out with absolute certainty what, if anything, can be constructed. The selling agent saying it is green zone is just not good enough. Why risk losing a fabulous view? And finally, when I am assessing properties for my clients I always ask the following questions.
If circumstances change and they need to sell quickly is the price right to enable them to do that? Secondly, is this a property for which there will always be demand irrespective of market conditions? And that is that there will always be demand for top quality in prime locations.
It always has been, still is and always will be about location. And I, for one, will be waiting for the full-year number of overseas buyers in with even more interest than usual. That statistic will tell us a lot. I update this Spanish Property Market report throughout the year as new data becomes available. You can also follow us on Twitter and Facebook for the latest news as it happens.
Still in recovery mode from the meltdown, the Spanish property market faces more turmoil in the wake of Covid The signs were there at the end of Now the 1st half year statistics seem to confirm a downward trend.
Overseas demand in Spain in Will it be up, down or flatlining? All intellectual property in the design, images and text of this website are and will remain the property of The Property Finders. Any infringement of our rights will be pursued vigorously.
GDPR - We guarantee the personal data entered in the contact form will only be used for the purpose of replying to your enquiry and will not be shared with any other company, service or provider. Spanish Property Market Introduction Without doubt an important factor in the recovery of the Spanish property market since the meltdown has been the growth of the overseas sector.
Where the numbers come from The Notaries produce the most reliable property market statistics. But there are always buts However, the fact is that, in spite of minor improvements, not that much changed in