How has the Spanish real estate market been affected by the pandemic
The closure of borders and the introduction of quarantine definitely affected Spanish real estate. What is happening in the country now can be called as a standby mode. A slight drop in property prices in Spain is forecast in the near future.
Real estate market in Spain now
Despite the fact that banks and notaries are working, at the moment there are no sales or impressions. Nowadays, the new buyer is not the one who «wants to buy cheap», but the one who just «wants to buy». People are waiting for proposals. The changes in real estate market are price changes. But at the moment it is not so. Sellers have taken a wait-and-see attitude. They are watching how the crisis will end. Buyers, in turn, are waiting for prices to fall. According to forecasts, it will happen by about 15-20%. But a few months after the quarantine, prices should partially «roll back» to pre-crisis indicators.
Economy in Spain is strong. Now it is also supported by the European Parliament. So, the suspension of the activities of all national institutions and markets is temporary. Moreover, the situation in the Spanish real estate market is even more stable than in the crisis of 2008. By that year, real estate market came up with a large number of mortgages. That is, 80% of the real estate sold was not confirmed by anything. Today, the situation is reversed: out of ten transactions, only three are mortgages. That is, in seven out of ten cases, real money is in circulation.
What will happen to Spanish real estate sector after the quarantine
It is difficult to think now about what will happen in a month, two or six months. Especially in a situation where the terms of quarantine are reliably unknown.
A rapid and massive collapse in prices is not expected.
In the primary market, a decline of 15-20% is expected, but with favorable conditions, prices will add about 10% by the end of 2020. The final 10% decrease should not be considered significant. Such a discount could have been gained at auction even a few months ago.
Some real estate companies already offer discounts of 5-8%. But you need to understand that these cases are isolated: for instance, for the last five apartments in the complex. Someone attracts buyers not with discounts on the properties, but with gifts: they give equipment or furniture. It is practically useless to bargain with builders, as they have a strict calculation and will not work in the negative. It is easier for them to freeze the construction site, and after quarantine to sell properties at pre-crisis prices.
Everything is stable in the secondary market now. However, it can affect the delayed demand. Those people who wanted to sell an apartment in February-March will also try to sell it, but in May-June. At this time, new apartments will appear on the market. There will be lots of offers and a decrease in prices.
We can expect that the changes will also affect loan. Banks will lend more actively, but check applications more carefully. It offers assistance in the form of a loan at 3-4% per annum. This is how assistance from the state is provided: it does not just distribute money, but sell it through credit systems.
The rental market is in more uncertainty than the real estate market. This is especially true for resort real estate. But the experience of previous crises shows that even if people do not have the means to buy an apartment, they will find money for travel. So, the current downward trend will reverse with the opening of tourism.
The rental market also benefits from its mobility. The price of the property can be changed within 20 minutes. So, if apartment owners adjust the price depending on the needs of customers, they will stay afloat.
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