2021 will undoubtedly be a very interesting time on the Spanish real estate market. We tried to answer some of the most important questions that arise in the context of 2021 and real estate market in Spain.
The Spanish real estate market in 2021 - buyers
In 2020, the pandemic made many people who were planning to buy property in Spain to postpone their decisions. These buyers are waiting to be able to travel freely and have high hopes for the vaccine. They declare that they want to come to Spain and buy a real estate as soon as travelling will be possible without quarantine. However, this is just one group.
The second is the group of buyers who, after the first lockdown, said that they would rather prefer to spend each possible subsequent lockdown at their home in Spain, where they will have sun, beautiful weather and the possibility of going out to the garden. This group also includes many people who have been dealing with the decision to buy a property in Spain for months or years, but have not implemented their idea so far due to the need to appear in the office every day or to look after their own business. Lockdown has shown that you can work just as efficiently from your home office, which may as well be in some nice, warm place - in Spain, for example. This group mainly includes buyers from northern Europe.
Brexit and the Spanish real estate market in 2021
An interesting case are the British, over which in 2020, apart from the pandemic, the specter of the imminent Brexit was hanging. This group of buyers decided to buy properties in Spain often without arriving, based on photos, videos, descriptions and documentation of the property provided by their brokers. The British realized two things:
- Buying real estate in Spain from 01/01/21 will be much more complicated for them, because they will be treated as buyers from outside the EU, which translates into more documents and permits that will have to be collected;
- The purchasing power of the pound sterling can drop significantly once Brexit becomes a reality, so buying a property in Spain in 2020 will be a much safer investment.
As a result, agencies serving British clients, especially high-end ones, count 2020 as a very successful year.
Will their winning streak continue in 2021? The British have been the largest group of foreign buyers of Spanish property for years and the Spanish economy has benefited enormously from this. I am convinced that the Spanish government will very soon offer British buyers solutions to help them return to the Spanish real estate market. The special position of Gibraltar, which due to its geographical location is on the way to negotiate a much better deal with the EU than the United Kingdom, may be a great help here. I think Gibraltar could become the UK's "back door" to the Spanish property market.
What should you pay special attention to when planning to buy a property in 2021 in Spain?
The most important thing, as always, is to think carefully about what you need. This rule is constant and does not depend on the market situation. I recommend that you read about different regions of Spain, then look around the selected market and learn about the rules governing it. It must be remembered that Spain is a set of autonomous communities, and their autonomy also translates into tax regulations. We recommend following our blog, where we publish up-to-date and useful information related to the real estate market and the process of buying real estate in Spain.
Property prices in Spain in 2021
We have a client who has been calling every two or three weeks for the last few months to ask us the same question: "Have the prices dropped yet?" This is a meaningful question given the pandemic situation and the global crisis it causes. It turns out, however, that prices in Spain have not fallen. On the contrary, one of the largest real estate portals in Spain, Idealista.com, reported that prices rose by 0.9% in 2020 [source: Idealista]
In the same article, Idealista outlines the trends in 2021:
„Despite the predictions of many analysts that the future will bring drastic drops in prices, it is very likely that real estate prices in 2021 will behave as in 2020: slowing declines and an upward trend in most markets. The actions of the ECB, the historically lowest interest rates on mortgage loans, the stability of real estate compared to other assets and the hope for a quick recovery of the market may cause a price increase.”
In my opinion, the market should be observed, because the lack of general declines does not mean lack of opportunities. Already in the second half of last year, the trend of greater openness of sellers to accepting offers was noticeable. Offers that were 10 or sometimes 15% lower than the initial prices were accepted. The higher the range of the property, the lower these percentages were.
Properties taken over by banks
It is also worth watching the banks and their real estate portfolios, although I do not expect miracles here. Properties reposessed by banks can be attractively priced. It is worth noting, however, that most of these are properties that the owners did not manage to sell before being seized by the bank, which puts their market attractiveness into question. Banks usually list the property at a price equal to the value of the loan, so bank foreclosure properties can be between 40 and 60% of the original value. A question arises here whether the starting price from the real estate bubble in the first decade of the 21st century was adequate to the value of the property and what is the real value of this property today. Another important issue is the current technical condition of such a property. Often, the owners, being aware that they would have to return the apartment to the bank, took everything out of it that had any value (including sockets) and did not care too much about what they would leave behind.
What is the recipe for buying property in Spain in 2021?
It's mindfulness. Watch the market, read offers carefully, ask questions. Also, look for an experienced broker who will become your market guide and guarantee the security of your transaction. And don't believe in the mega-bargains. If something seems too good to be true, it usually is exactly this.