Housing fever returns to Spain

According to the Bank of Spain, the Ministry of Public Works and a number of estate agents, housing fever returns to Spain driven by world events.

Housing prices have been on the rise since the pandemic with many people looking to move out of apartment blocks into homes, added to that a growing demand from Northern Europeans looking to make sure they have somewhere to escape to in times of a pandemic or trouble.

That combination has led to a growing euphoria in the market with prices rising rapidly, demand increasing and the number of sales rising. In 2021 there were 674,000 homes sold up by almost 20 percent on 2019 according to Samuel Población, National Director of Residential & Land at CBRE Spain

Data released by the Ministry of Public Works on real estate transactions that house sales are at levels higher not only than pre-pandemic life, but also the 2010 crisis.

Constanza Maya, Director of Operations and Expansion of Engel & Völker told La Sexta: “After a year of pandemic, with unemployment, ERTEs… the market behaviour was surprising, very dynamic, it worked very well with a lot of uncertainty.”

Speaking to La Sexta Gonzalo Bernardos, Professor of Economics and Director of the Real Estate Master at the University of Barcelona, ​​predicted that in 2022 between 750 and 775,000 homes will be sold.

He made reference to the sales figures for the first quarter saying that January alone was up 31 percent on the previous year, typically a quieter time for residential sales. He added that he expects May to see a significant upturn in the market.  

In terms of sales Madrid and Barcelona continue to account for almost a quarter of all national transactions, followed by Alicante, Valencia and Malaga. According to the CRBE the five provinces account for more than 40% of sales, a trend they see continuing and which they say will be reflected in prices.

The demand has seen sales take place much quicker than has typically been the case for the last decade, with properties moving within days in major centres and weeks in other areas rather than months or years.

Experts don’t believe that Spain is experiencing a bubble that could burst anytime soon with Samuel Población, from CBRE, saying: “The escalation of the prices of raw materials together with the tensions in the global supply chains will drive inflation to maximum levels. Despite the very moderate increase in interest rates and the increase in house prices, the interest rate effort will remain at reasonable levels and the increase in gross disposable income will offset most of the rise in house prices in 2022

“Under this scenario, the risk of a bubble in the sector seems distant,as shown by the ECB’s overvaluation indicators. In this sense, the greatest risk may come from the side of new construction, where the mismatch between demand and supply could put pressure on prices in this market.”

The housing fever is good for Spain’s economy as it fights to recover after the pandemic, but at the same time the signals are ominous for those at the bottom end of the scale or who have yet to get into the housing market.

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