The Global Pandemic: How It Has Affected The Spanish Property Market

The COVID 19 health crisis has impacted almost every country in the world, Spain included. But what has been the impact on the Spanish property market and will foreigners continue to buy up second homes on Spain’s sunny shores? A recent study carried out by Solvia, a real estate company, outlines the forecasted changes.

While we’re all still unsure of exactly when the pandemic will end, there is one thing that we can be sure of, according to Solvia, change is coming. The study states that “what is certain is that housing needs have changed and, as a result of the confinement period, other priorities have emerged to be considered when buying a new property".

An article, published on the Spanish property website, Idealista, highlights the key takeaways from the study. One of the most notable changes that we can expect to see in the Spanish real estate sector is a move away from small beach homes, in favour of larger homes – coastal or further inland – that offer more space for foreigners who want to live in their holiday home for a larger chunk of the year. Indeed, thanks to the rise in remote working across the globe, demand for larger properties that can facilitate comfortable remote working is set to soar.

Typically, many second homes in Spain are currently smaller apartments, close to the beach, and usually no bigger than 50m2 with one or two bedrooms. This may be perfect for a beach holiday or an Easter break at the seaside, but it may no longer be enough. As the way the world works shifts, so will the way second homes are used. Foreign homeowners in Spain can now spend a lot more time in their second homes, working while there and enjoying the good weather, not just for their summer holidays, but all year round. As a result of this, buyers will increasingly prioritise space, a home office, and natural light along with other features that facilitate their new way of working.

How The Criteria For Second-Home Buyers Will Change

Solvia has offered further insight into these changes, compiling a list of emerging priorities and motivations that second-home buyers are now seeking:

• Buyers will prioritise more spacious homes with workspaces over properties right on the beach front
• There will be an increase in demand for more outdoor living space such as a garden or terrace. After confinement, having a way to exercise at home has become a much larger priority, and so has outdoor dining and socialising
• Natural light, energy efficiency, and more sustainable building products will factor heavily into buying decisions. The world spent a much larger amount of time at home in recent years, so the desire for natural light is not only necessary to reduce bills, but also for better mental health
• As second-home owners start to spend more time in their holiday homes, we can expect a rise in more customised decor and luxury furnishings
• The more time people spend in their properties, the more emphasis there will be on using non-toxic materials and non-pollutants to reduce health risks

How Has The Spanish Real-Estate Market Fared in 2021?

While the situation continues to evolve daily, the good news is that foreign interest in the Spanish property market has not wavered. In fact, estate agents Engel & Völkers has reported record interest from potential foreigners looking to buy in Mallorca.

According to Idealista, the average cost of a property in Spain was €1779/m2 at the start of 2021, a rise of 0.9% from the previous year. Research from real estate agents Virto Property gives insight into which regions in Spain have seen growth and why. There has been a slight slowing down of growth in the resort towns on the east coast and south of Spain, with Andalucia, Catalonia, and the islands showing the biggest impact. On the other hand, Extremadura has seen the highest growth as more and more Spaniards swap city living for rural life after the pandemic.

One of the other notable changes the real estate market has seen during the pandemic is a boom in renting. Idealista states that rental listings have jumped up by 63% since the pandemic started, with many people opting to rent properties with a pool and outdoor space.

What’s The Forecast For The Spanish Property Market?

Spanish bank La Caixa predicts that house property prices will fall between 6% - 9%, not returning to post-Covid 19 prices until early 2024. That being said, others, such as S&P Global Ratings have a more optimistic outlook, forecasting that the market will be fully restored by the end of 2022. There is a big case for a quicker recovery, with many foreigners considering buying a Spanish property one of the easiest ways to be granted residency in Spain.

Other agencies such as Remax are also hoping for a quicker recovery for Spain, claiming that foreign demand for a Spanish holiday home has not dwindled and, if the situation continues to stabilise, it could be one of the biggest factors in restoring the real estate market in Spain.

Key Takeaways

While the outlook is hopeful for a quick recovery, the situation is evolving constantly and we’re not out of the woods yet. If regional and local lockdowns continue, there’s a high chance that demand for a spacious second home in Spain is going to continue to rise across Europe. While the sector will see a drop in house prices for sellers, there’s a lot of hope that the market will bounce back quickly and adapt to the new requests of the future foreign buyers.