Market experts usually publish at the end of the year statistics and conclusions about the previous year and forecasts for next one. 2019 was no exception. How was 2019 for the property market in Spain and how will it be in 2020? In this article we have gathered for you all the information on this subject.
2019 Second-hand property market in Spain
Everything indicates that the period of vertiginous increase in spain´s real estate prices has been left behind. According to the Idealista website, the price of second-hand housing in the country increased 1.6% in the last quarter of 2019, and 4.6% for all 2019 (up to € 1763 per m2). Does this mean that prices will start to fall soon? Experts in the real estate sector, including Fernando Encinar, head of the research department of the Idealista website, are sure that there will be no price reduction in the near future: they will continue to grow, although more slowly.
The real estate market situation in 2019 was greatly influenced by the adoption of a new mortgage law, which entered into force in June. From that moment on, the number of operations, as well as the mortgages granted, decreased. However, according to Fernando Encinar, the indicators will gradually return to normal in 2020.
According to the Idealista website, the real estate prices fell in 5 autonomous communities of Spain in 2019: Extremadura (-1.3%); Galicia (-1.2%); Asturias and Castilla-La Mancha (-1.1%); Castilla y León (-0.2%). Prices have not changed in Cantabria. On the contrary, a growth was observed in other regions of Spain. Andalusia ranked first in this indicator, since housing prices increased 8.8%. It is followed by the Balearic Islands (6.6%), the Canary Islands (5.2%) and Murcia (4.9%).
Speaking of provinces, the highest prices growth rate in the second-hand property market in 2019 was recorded in Lleida (9.3%). It is followed by Malaga (8.5%), Granada (7.2%), Balearic Islands (6.6%) and Santa Cruz de Tenerife (6.2%). On the contrary, there was drop in prices of second-hand properties in the provinces of Ourense (-9.4%), Soria (-5.7%) and Cuenca (-5.6%).
The Balearic Islands was the most expensive province of Spain in 2019 (€ 3060 per square meter). They are closely followed by: Gipuzkoa (€ 2969), Madrid (€ 2805) and Barcelona (€ 2693). On the contrary, the cheapest provinces in order to buy homes are Cuenca (€ 771) and Ciudad Real (€ 802).
Speaking of provincial capitals, the city where housing prices have grown the most in 2019 was Girona (+ 15.3%). It is followed by Santa Cruz de Tenerife (+ 12.9%) and Huesca (+ 8.2%). On the opposite side are Orense, Soria and Caceres, where prices fell 6.6%, 4.6% and 3.1% respectively in 2019.
The most expensive capital in 2019 was San Sebastián (€ 4540 per square meter); secondly, Barcelona (€ 4115); thirdly, Madrid (€ 3732); fourthly, Palma (€ 2972); and, fifthly, Bilbao (€ 2931). On the contrary, the most economical capital is Cuenca (€ 1040).
New build property market in 2019
The average price of new build property in Spain during the period of 2019 increased 4.5% in the provincial capitals, up to € 2453 per square meter, according to the “Real Estate Sector Trends Report”, published by the Sociedad de Tasación.
However, the growth rate recorded at the end of 2019 is lower than a year ago: 5.4%. The average price of new build property in Spain increased by 2.2% from July to December. That is to say, 0.9% less than in the same period of 2018.
According to this report, the average price of new build property of 90 square meters in the capitals of the provinces of Spain is approximately € 220 800. The average price of new build property in other cities amounted to € 1682 per square meter at the end of 2019 (+ 1.8% compared to 2018).
The most expensive region in order to buy new build homes in Spain was Catalonia (€ 3934); secondly, Madrid (€ 3617); and thirdly the Basque Country (€ 2734). At the opposite end of the list are Extremadura (€ 1198), Murcia (€ 1260) and Castilla-La Mancha (€ 1434).
The most expensive province capitals in Spain are Barcelona (€ 4433) and Madrid (€ 3627). They are followed by San Sebastián (€ 3609). However, according to estimates by the Sociedad de Tasación, the price growth rate in these cities continues to decline. The most economical capitals for buying new build properties are: Caceres (€ 1189), Ciudad Real (€ 1200) and Badajoz (€ 1205).
The report also provides information on financial efforts in order to buy a home in Spain. The national average is 7.4 years of gross salary. The highest rate is observed in the Balearic Islands − 16.4 years; and the lowest − in La Rioja − 4.9 years.
Spain property market forecasts for 2020
2019 was a turning point for the Spanish real estate sector. The price growth rate and the number of operations decreased significantly and approached the level of healthy growth. That is to say, these data allow us not to fear the formation of a new real estate bubble. According to experts, the real estate sector in 2020 should focus on attracting more young buyers looking for their first home. Without these buyers, it will be difficult for the real estate sector to reach the goal of 150 000 new residential properties, which are necessary for sustainable development in the construction industry. This indicator was still far from these figures in 2019, although the exact data is still unknown. In turn it amounted to more than 100 000 in 2018.
Regarding the renting, a deceleration will also be observed in this sector. However, prices will continue to rise in many cities. In addition, the sector will be greatly affected by the agreement between PSOE and Unidas Podemos in order to limit the increase in rental prices. According to real estate experts, this measure will lead to a reduction in supply and will affect the housing rental sector.
These are the initial data for the real estate sector in Spain, which begins in 2020. For now, there are more questions than answers so far: there are too many “dark spots” and the country’s political situation is too unstable.
In this sense, in order to have a rough idea of what the real estate market holds in 2020, experts in various fields analysed the current situation and answered several important questions.
Should we expect a new recession?
In this matter, the opinions of all the experts agreed: a new recession is not expected in the near future. However, the increase in prices and the number of operations will decrease markedly, which is absolutely normal after several years of rapid growth.
Will property prices increase in Spain in 2020?
Growth forecasts for 2020 by several market experts:
- Pisos.com: according to the website, the growth rate of real estate prices in 2020 will be between 2 and 4%; and for rentals, between 4 and 6%.
- Fotocasa: Forecasts of this website, growth of between 1-2% in the sales field; and 2.5% in the rental field.
- Asociación de Constructores Promotores de España: it expects sales prices to increase between 3.5 and 5%.
- Moody’s: According to the forecasts of one of the most important rating agencies, the value of homes in Spain by 2020 will increase 5.5%.
- Standard & Poor’s: in turn, predicts an increase in property prices in Spain in 2020, approximately 3.5%; and in 2021 − 3%.
- Bankinter: According to this bank forecasts, the growth rate of real estate prices in 2020 will be between 1-2%.
When is the best time to buy a home in Spain in 2020?
Most experts believe that the situation in the Spanish property market will be relatively calm throughout the year: strong falls or recessions are not expected, which means that it makes no sense to wait for a best time to buy a home. The best moment depends solely on the requirements and financial possibilities of the client.
However, there are those who disagree with this opinion. For example, Sandra Dasa from Gesvalt believes that the best time to buy homes is during the first months of the year, for the following reasons: the Euribor index is still low, the ECB does not raise rates and prices continue to increase. Other experts agree with this opinion, adding that during the first months of the year it is the best time to buy a house for your own use. As for investments, experts advise to wait for stability in the current government in order to familiarize yourself with the list of measures it plans to take regarding real estate.
Are you planning to buy a property in Spain in 2020? Our experts will answer all your questions about buying homes. You can get acquainted with our catalogue of homes in Spain, here.
