What does the record-breaking Q1 2022 on the Spanish property market mean for buyers?
The Spanish real estate market has been definitely a seller's market since last year and this trend strengthened in Q1 2022. If we add to this rising real estate prices and a very large increase in the number of properties sold, we have a recipe not only for a record year, but also for real challenges for potential buyers.
What you will find in the article:
- 2021 was just a warm-up to what is happening in 2022..
- Price increase and record number of sales
- Who was buying real estate in Spain in the 1st quarter of 2022?
- Where did foreigners with an appetite for Spanish real estate come from?
- Which markets have grown the most in Q1 2022?
- What does all this mean for potential buyers?
- What about real estate price negotiations?
- A few words of summary
2021 was just a warm-up to what is happening in 2022..
The real estate market in Spain has had a very good year in 2021. The experience of the pandemic, the confinement within four walls and the big question mark: "what next?" have caused many people to implement their plans, often postponed from year to year – and do it immediately. Northern Europeans began to flock to the Spanish coast. We often heard then: “If they are going to lock us up again, we prefer to stay at our house in Spain. We have a garden, a swimming pool and, above all, the sun." This argument appealed to us the most, so we did our best helping our clients find Spanish houses and apartments. Thus, 2021 for Dream Property Marbella has become the best year in the company's history so far.
The year 2022 started a bit calmer. This is a standard in our work: the end of the year and the beginning of the next one are dominated by holidays, New Year's Eve, summaries and closing the year in companies. Few people have space to think about other things then, but this year there were those who were ready to start their Spanish adventure on January 7th. Our calendars began filling up around the second half of January. Most customers came in with a clear vision of what they wanted to buy and how much money to invest. And here the matter got a bit more complicated.
Well, real estate prices in Andalucia increased by about 10% in 2021. The situation was similar in the Balearic Islands + 7%, Canary Islands + 5.6% and Costa Blanca + 8.4% [source: Idealista]. In this situation, buyers often had to verify their original assumptions and reach deeper into their wallets or use a mortgage.
Price increase and record number of sales
In the first quarter of 2022, the upward trend – as expected – continued. We wrote about it in our forecasts for 2022. Prices were rising, but most of all, the number of sales increased dramatically. The property market in Spain grew by 25% in the first quarter, and 173,688 properties changed owners.
Comparing month to month, sales in March 2022 increased:
- by 16% compared to last year,
- by 37% compared to 2019
- and as much as 118% compared to the pandemic year 2020.
Looking at the situation in the regions, we will notice that the sales increases were significant in all locations of interest to foreign investors. Sales rose double-digit in each of these regions except Murcia, with the largest increases being in the Canary Islands +45% and the Balearic Islands +21%. In the most popular destinations, sales increased by 23% in Andalusia, home of the Costa del Sol, and by 21% in the Valencia region, where the Costa Blanca is located.
Who was buying real estate in Spain in the 1st quarter of 2022?
Foreign investors bought 21,638 properties in Spain in the first quarter of 2022, which is an increase of 73% compared to the same period last year. This data comes from the latest quarterly real estate market report prepared by the Spanish property registries association.
Local buyers have also entered the year strongly. They purchased 142,661 properties in the first quarter of 2022, an increase of 22% compared to the previous year. However, this is a moderate increase compared to the 73% increase in foreign demand. The share of foreign buyers in the Spanish property market rose to 13.2% in the first quarter. For comparison, at the end of 2021, foreign investors were responsible for 12.6% of all real estate transactions.
Where did foreigners with an appetite for Spanish real estate come from?
The British have been at the top of this type of rankings for many years, and the first quarter of 2022 was no exception. It was the British who bought the most Spanish real estate at that time, ahead of the second-largest investors from Germany by 27%.
Which markets have grown the most in Q1 2022?
Here we have the Netherlands with an increase of 190%, followed by Poland + 175%, Norway + 173% and Germany + 130%. Romania and Morocco, on the other hand, recorded the lowest increases, by 34% and 15% respectively.
What does all this mean for potential buyers?
First, a lot of competition. The Spanish real estate market has been definitely a seller's market since last year. This pleases developers and sellers of real estate, but it does not make life easier for buyers who, above all, must decide quickly. Much faster than a few months ago. At the moment, good real estate in the secondary market is disappearing like the proverbial fresh rolls. Development projects in good locations are so popular among buyers that when trying to make an appointment with clients at the sales office of one of the local large developers on April 28, I heard: "Sorry, we have the first available appointment on 4th of May." Of course, not all projects are under such a siege, but you still have to make an appointment in advance.
The same goes for making an appointment with us. Since our calendars are crackling at the seams, and yet we want to provide our clients with the service that you have become accustomed to for the 12 years of Dream Property's existence, we must organize our and your time as efficiently as possible. The situation is similar now in almost all real estate agencies, so if you are going to the Costa del Sol to look for a property for yourself, please notify us – or the broker of your choice – of your intention at least one week in advance. Otherwise it can be difficult to arrange visits for you.
What about real estate price negotiations?
Another topic is price negotiations. As a rule, you do not negotiate with developers. You can try to win some bonuses when it comes to furnishing the apartment, but the price is the same. It is hardly surprising if there are enough buyers.
The secondary market has its own rules. You should always make an offer here. This is what we say to our clients, although we are afraid to answer the question what the offer is to be. In the past, you could safely propose a minimum of -10%, now it is not obvious at all. Sometimes it even happens that sellers respond to our offer with a counter-offer... higher than the initial price. Such situations arouse consternation among those interested – luckily, they happen rarely.
A few words of summary
The real estate market in Spain is doing great. it is now completing another record year and there are no signs that it will be slowing down. This dynamic brings not only opportunities but also challenges. Both: for us to provide our customers with a service that has been our showpiece for years, as well as for the buyers themselves. One thing is certain: a well-thought-out investment in a well-chosen Spanish property can be an antidote to galloping inflation, and the added value is the ability to spend time in your apartment or house in one of the most beautiful and warmest places in Europe..
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