Coronavirus: The effect on the Spanish property market 2021
If you’re thinking of buying a property in Spain, then it’s important to understand where the property market is before starting your search. Major world events have a huge effect on the property market and the Covid-19 pandemic has been no exception. Whilst the pandemic isn’t over, restrictions have been lifted and UK residents can travel again. This means that more people are starting to go on holiday and are thinking about investing in overseas property too. Covid-19 infections are also decreasing in Spain, helped by the successful vaccination rollout. These factors all have an impact on the Spanish property market.
In this article, we look at how the Covid-19 pandemic has affected the Spanish property market and what we can expect for the future.
What Effect Did Coronavirus Have on Spain’s Property Market?
Before coronavirus rattled the Spanish economy during 2020, Property in Spain was in high demand. For many foreigners, it is a popular destination due to its Mediterranean climate and thriving ex-pat community. Studies showed that Britons were the top buyers of Spanish property across December 2019 and January 2020.
However, whilst growth in the Spanish property market came to a halt during Spain’s first coronavirus lockdown, demand began to rise with the easing of restrictions. The summer months led to significantly higher numbers of virtual viewings in Spanish property, with coronavirus sparking substantial international demand to own a place in the sun.
2020 saw Spanish property prices rise by 1.6%, having seen a decline in 2019. Following some surprisingly positive moments for Spanish property in 2020, foreign demand for 2021 also appears to be on the rise despite COVID-19 and post-Brexit concerns.
How Did Brexit Effect the Property Market in Spain?
In 2019, property in Spain experienced vigorous activity from expat buyers and sellers who were looking to resettle overseas or return home before the impending Brexit deadline.
A significant number of Britons were uncertain about their post-Brexit futures in Spain due to inadequate support and lack of communication from the British and Spanish authorities.
The biggest concern for UK buyers looking for a property in Spain was the news that UK travellers could only stay visa-free in the EU for 90 days within a 180-day period. With freedom of movement becoming a thing of the past, new regulations mean that from 2021 onwards, UK citizens are limited as to how much time they can spend in holiday homes.
The British community in Spain is estimated to be anywhere between 500,000 to 1 million, but not all Britons are registered as Spanish residents. Out of fear, nationals began returning to the UK on the build-up to Brexit to avoid repercussions, which led to a decreased British demand for Spanish property.
Have Brexit and Covid-19 Affected Appetite for Spanish Property?
Surprisingly, Brexit and COVID-19 do not appear to have dampened British appetite for Spanish property. Taylor Wimpey Espana reported a 39% increase in virtual viewings for Spanish property during the first week of 2021, with Alicante, Mallorca and Costa Blanca, being particular areas of interest.
Online property site, Kyero, have also reported a 446% increase in young Britons between ages 18–24 viewing Spanish property on their platform. It’s thought that due to Brexit and Covid-19, many young people are looking to become Spanish residents to improve their freedom of movement.
Spanish Property Market Optimism for 2021
Foreign buyers account for 16% of the Spanish property market. By nationality, Britons accounted for 14% of foreign market share in 2019, which was the largest group of foreign homebuyers, although the downward buying trend continues. Compared to the market share in 2018, the number of UK buyers was down 14.3%. During the first half of 2020, it was reported that purchases from British nationals were 41.1% lower than the first half of 2019.
The larger cities such as Barcelona and Alicante, where there were sharp price increases, showed considerable buying declines in January 2020. Although, according to the Institute of National Statistics (INE), by region, properties in the Canary Islands, Almeria and Murcia enjoyed strong sales growth in January 2020.
The Property Market, Coronavirus And Expat Buyers And Sellers In Spain
Spain was one of the European countries worst affected by the coronavirus. According to Worldometer, as of 26th January 2021, Spain has a total of 2,774,014 positive cases and a death toll of 57,291.
To curb the spreading of the virus, the Spanish government ordered a nationwide lockdown, whereby no-one could leave their homes except to go to the supermarket, pharmacy or to care for the vulnerable and elderly. Businesses and restaurants had to close, travel restrictions were in place, and police issued fines to anyone who did not have a sufficient reason for being outside.
The travel and tourism sector has been severely affected by the lockdown during 2020/21 and expats who rely on rental income, or are looking to sell and relocate elsewhere are also suffering.
Property rentals is a flourishing market in Spain, and many expats let their homes to travellers due to the high financial returns available. However, travel restrictions and border closures enforced worldwide have had a damaging effect on rental income, with tourists unable to travel.
Today, this is slightly different however, as rates have fallen significantly since the vaccine rollout. Travel restrictions have been lifted which means tourism is starting to pick up again. Spanish tourism has actually increased by 78% this year compared to 2020, with most tourists coming from Germany, France and the UK.
The Spanish Property Market in 2021
While the coronavirus pandemic has delivered a shock to the Spanish housing market, it is a passing crisis. Overall, the Spanish property market has weathered the storm of Covid-19 well; it seems that COVID-19 temporarily disrupted Spanish property market growth rather than derailing it.
The Bank of Spain expects the domestic housing market to remain fragile for some time but for international investment to retain momentum. This means more people will be investing in holiday homes as things return to normal. For the overseas buyer life in Spain is attractive and an excellent investment due to its popularity with tourists. For Britons, if Sterling rallies in the coronavirus aftermath, the British demand for Spanish properties is expected to surge.
One thing that Covid-19 has changed about the Spanish property market is what buyers look for in their properties. Data from AEDAS Homes and estate agents in Spain show that buyers in Spain are now looking for large and efficient properties with gardens and in quiet areas.
Overall, it seems that COVID-19 temporarily disrupted Spanish property market growth rather than derailing it. Recovery may be slow initially, but it is certain to pick up as normality returns and more people are looking to travel and invest in overseas property.