Spanish Property Prices Expected to Decline
Real estate agents have forecast that there will be a decline in Spanish property prices as a result of COVID-19. There are particular areas of Spain, however, which are expected to be hit more significantly than others.
The outlook for Spain’s economy took a turn for the worse in May as the Bank of Spain announced that they predicted a 12.4% fall in GDP, with a rising unemployment rate of 20%. As a result, agents expect an inevitable price drop within the Spanish property market.
There are conflicting opinions with regard to how much Spanish property prices will be affected. Colliers International Spain has anticipated that there will be a short term 5-10% drop in property prices this year. However Spanish savings bank foundation FUNCAS have stated that they believe the drop will be more in the region of 10-20%.
Take a look as we outline the different areas of Spain expected to experience a decline in property prices as well as the future of the Spanish property market.
Where will Spanish property prices decline?
Agents expect that property prices in Spain could be hit the hardest within holiday hotspots, potentially seeing a decline of up to 10%. Some of these Spanish tourist destinations include:
- Palma, Mallorca
- Canary Islands
Spanish tourist destinations have been particularly hard hit this year as a result of the travel restrictions brought about by COVID-19. More often than not, it is the areas where unemployment is highest, that overall growth tends to stagnate. Until Spain’s economy sees recovery, it is expected that Spanish property prices within holiday hotspots will continue to be affected.
Outlook for the Spanish property market
As it stands, this expectation for Spanish property prices is not yet a reality with the market reasonably stable at present. However, real estate agents have stated that given the current economic situation, all signs point to a negative direction. It is predicted that these changes within Spanish property prices will take place before the beginning of 2021.
The CEO of Spain’s Appraisal Society has stated that there has been a 25% decline in adverts displayed on Spanish property sites, indicating the beginning of a downfall. Several agents, however, have stated that they believe the decline will not be long term.
Ferran Font, director of studies at Pisos.com, has stated that he does anticipate for Spanish property prices to be as severe as the 2009 collapse. “Experience tells us that the markets that best withstand crises are those in which there is a sustained, local demand for housing, as is the case in large cities, of which Madrid and Barcelona are an example, but also Valencia or Malaga.”
Only time will tell if the Spanish property market reflects what many agents have predicted and just how long these changes will last.