Spanish Property Market forecast in 2022
What will buying a house in Spain look like in 2022?
Is there a risk of a new property bubble?
Will there be a booming demand for housing on the Spanish coast?
After the strict lockdown that Spain experienced in 2020, the demand for housing in Spain has risen sharply. Many of the transactions that failed to close in the year of the lockdown took place in 2021.
But how will things continue in the year 2022?
You can read about it in this article.
Looking back at the year 2021.
The year 2021 ended with the highest number of home sales in the last ten years.
After the 2020 lockdown, housing demand has exploded in full force
in 2021; many of the deals that could not be closed in the first year of the pandemic, started again in 2021.
This catching-up, in addition to the growing demand for housing, made 2021 a record year for house sales in Spain. Since the beginning of the spring of 2021, more homes have been sold in Spain than at the height of the real estate boom in 2008.
The year 2021 ended with more than 580,000 homes sold, which was the highest number in the past ten years and close to the peak year of 2008 with 600,000 homes sold.
3 factors that will influence house prices in Spain in 2022.
- Demand for housing continues to exceed supply
- Rise in the price of building materials
- The Return of Foreign Buyers
More buyers than supply
In 2022, the demand for housing in Spain will continue to increase. The supply of new-build homes is growing insufficiently and is lagging behind demand. That demand is four times the number of homes that will be completed in 2022.
Rising construction costs
Rising raw material prices mean that construction costs will rise by 8%. Almost half of this increase will be passed on in the sales prices of new-build homes.
The return of foreign buyers
The big surprise of 2022 will be the boom in second homes. The big comeback will mainly be seen on the Mediterranean coast. The return of foreign home buyers will partly be the cause of this.
In the first six months of 2021, home purchases by foreigners rose by 47% to nearly 48,000 transactions. This was after the international housing market came to a complete standstill in 2020 due to the restrictions on mobility.
More new-build apartments are already being sold in Malaga than in the entire city of Barcelona. The cities of Almería, Cádiz, Palma and Alicante sold more apartments in November than at the height of the property boom in September 2008.
Price development for the Spanish property market for the year 2022.
- Price level new homes in 2022
Due to the lack of balance between supply and demand, as a result of the lack of new-build stock and the shortage of starting up newprojects, an increase is expected. The increase in house prices in Spain is expected to be between 8 and 12 percent on an annual basis.
- Price level for existing homes 2022
Due to the shortage in the market for newly-built homes mentioned above, some of the home buyers will move to existing homes. This, inturn, will drive up the price of existing homes. The expected price increase for existing homes will be between 6 and 10 percent.
Spanish regions with the strongest increase in 2022
There are 4 areas in Spain where the increase in house prices will be most noticeable in 2022.
- In and around the 2 largest Spanish cities; Madrid and Barcelona.
- The archipelago in the Mediterranean Sea; Majorca, Menorca and Ibiza.
- The Costa Blanca; Valencia and Alicante with the coastal strip between these two cities.
- The Costa del Sol; in and around Malaga.
Opportunities and risks for the Spanish housing market in 2022
- Is there a risk of a new property bubble?
- Negative interest rates and inflationary pressures, housing as a safe haven.
- Spanish property, haven for foreign investors.
Is there a risk of a new property bubble?
House sales are at their highest level since the property boom of 2008. But unlike then, there is no surplus in the housing supply in Spain.
A mismatch between oversupply and limited demand coupled with soaring interest rates could lead to the collapse of house prices.
That situation is now completely out of the picture. Construction companies now analyze the market much more. The Spanish property sector has learned its lesson.
This also applies to the Spanish banks, which do not provide easy access to credit. They offer a maximum of 80% of the value and now impose strict conditions for this.
Negative interest rates and inflationary pressures, housing as a safe haven
Everything indicates that investment in housing will be the biggest inflation protection in 2022. Many people will take the plunge and buy property.
Their savings capacity has increased since 2020. There are more savings available that yield virtually no interest.
High inflation, declining availability of existing housing and low interest rates are pushing many investors towards the Spanish property sector, turning it back into a safe haven.
Spanish property, a haven for foreign investors
More than ever , property investment appears to be a haven of choice for private, foreign investors . They buy property that they can enjoy while its value rises. Even in the most adverse market conditions, the demand for property in Spain will always persist.
Changing wishes of buyers of a house in Spain
Covid 19 will also change home buyers' housing wishes in 2022
Just as we seemed to be entering the new normal, the omicron variant has rekindled fears of a future lockdown. The idea of moving further away from densely populated centres has resurfaced in the minds of many home buyers.
The trends that emerged during the pandemic will continue into 2022; an increase in the demand for larger housing in outlying areas, to avoid dense population and seek fresh air.
Homes with ample natural light and homes with large rooms will be the most popular. In other words, large windows, terraces, balconies, rooms to be used as a home office and a large kitchen are the new demands of the home buyers in Spain.
These characteristics are much easier to find in new-build homes than in existing homes. It is therefore likely that a lot of demand will focus on new-build homes in the countryside around the cities.
The question is how much the average house price in Spain will increase in 2022
Predictions are more difficult to make because there are currently confounding factors related to the virus sweeping the world. But as house prices have soared even during the pandemic, there is little doubt that they will continue to rise in 2022.
A cautious forecast of the price increase in 2022 for new-build homes in Spain is between 8 and 12 percent.
Existing homes will show a price increase of between 6 and 10 percent in the course of 2022.
Houses In Spain
Sources I consulted for this article: the Spanish Statistical Office, publications from the professional association of Spanish notaries and publications in the Spanish media.