Good News For Future Property Sales
Industry insiders are forecasting that the Spanish property market will recover to around 80-90% of its pre-pandemic levels by the end of 2021.
After a slow emergence from a period of hibernation during confinement the real estate sector of Spain’s economy is already starting to see steady progress. The official association of agents (COAPI) is reporting positive signs giving rise to hopes of sufficient growth during the remainder of 2020 to pave the way for the optimistic predictions outlined. In contrast to the financial crisis experienced in 2008, where recovery took until 2014, there is little or no surplus supply in the housing market. Almost certainly due to lessons learned from the devastation that ensued, public and private debt is no longer of catastrophic proportions, making a second crash an unlikely prospect.
There also remains a huge appetite for Spanish property from overseas which, if anything, has been further fuelled by COVID’S temporary paralysis of the market. The real estate sector has re-invented itself and taken a much more grounded approach to supply and demand since the dark days of the crash. Neither has the economy ground to a complete halt as before, given the tools that technology, not widely available 16 years ago, now provides.
It is estimated that Spanish property prices will fall by an average of 10-20%, in the short term, dependent on the area, but, as demand increases, market forces will drive up the value of real estate. Interestingly, changes are being seen in the types of properties sought by would-be investors since the outbreak of COVID-19. Agents have reported that buyers are favouring houses with outdoor space over properties that offer only indoor living. Even if the interiors of the latter are more spacious, a means of escape, if only to a small balcony or terrace, has apparently become an essential requirement for the post lock down home owner.
The virus seems to have had a lesser affect on purchases of luxury properties with many sales going ahead in spite of restrictions of movement imposed on both buyers and sellers. There was speculation here in Ibiza that recent construction regulations, which limit the size of rural new-builds to 320 square metres, may harm sales. The new laws, introduced to preserve the integrity of the natural surroundings, whilst certainly resulting in greater difficulty obtaining licenses, have in fact, encouraged buyers. It would seem that investors value the exclusivity of property ownership on the island and demand has increased in response.
Despite the general atmosphere of turbulence and the constant shifting of sands there is still reason for optimism as the greater fluidity which now exists in the property market will help it to avoid the severe peaks and troughs which have plagued it in the past. It has become a recognised fact, universally, that no one can predict the future path on which COVID-19 will lead us. The Spanish property market, however, has been resilient in the face of this global crisis and is predicted to remain buoyant throughout the journey to world recovery – whenever that may be.
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