360 days of sunshine, mild weather, high standard of living and countless other benefits for health and wellbeing are just some of the many reasons, north europeans seem to gravitate towards the Mediterranean Coast or the Canary and Balearic Islands. To live or retire in Spain is a dream for many.
If you have been playing with the idea to invest in Spain, then 2020 might be the perfect time for you to do so.
Real estate experts predict that during the last quarter of this year, the gap between what is offered and what is asked for will be the smallest in the coming years. They suggest that the best time to buy a property in Spain will be during November and December 2020.
The effect on the housing market due to the economic crisis caused by the coronavirus is therefore animating investors and savers to be on the lookout for opportunities in the real estate market. So why could now be the best time to buy property in Spain?
Since the outbreak of the coronavirus pandemic, the number of property transactions in Spain has fallen by 24.4% overall. “Only those who needed to buy a house have done so,” says Jesús Duque, vice-president of the Alfa Inmobiliaria network.
Since the confinement and the gradual reactivation of the market “we have been witnessing a continuous trickle of price reductions, we could make a ridiculous comparison with the Malaysian drop, to explain that this situation really harms the positioning of the home in the eyes of the buyer, who no longer knows if the correct price is now or will be in three months’ time” says the Alfa executive.
However, the situation in the coming months is very different. As in other crises, opportunity seekers have been observing the market for months in search of possible bargains among the thousands of homes – and all kinds of real estate assets – currently on sale in Spain. “And they know that in a very short time the gap between what is asked for a property and what is paid for it will be the smallest in the next few years”, says Duque. Many owners cannot wait any longer and need to adjust their expectations if they want to sell.
It is worth noting that before the pandemic hit the world economy, housing in Spain was close to its peak prices and generally no longer attractive as an investment. Today, six months after this situation began, the real estate supply has grown exponentially, which will favour the drop in price of this type of asset and the arrival of buyers.
In the opinion of the Alfa Inmobiliaria network, there are reasons to think that this last quarter of the year will be very active. These are the main reasons why buying property in Spain in 2020 is a good idea:
- The number of people and companies in need of liquidity is very high. Unfortunately, the deterioration of the labour market and the economy in general has led many people to have an imminent need to reduce expenses and gain in liquidity. And, the sale of a property can be a lifesaver for many in this case.
- The number of empty homes due to the death of their occupants is growing. The sad reality of the COVID-19 pandemic is that it mainly targets the elderly, something which is causing an increase in the number of homes in which the owners have unfortunately recently died.
- Negative Euribor, and with no expectation that it will grow towards higher values. This translates into particularly favourable conditions for the mortgages that are now being set up, as well as a price war to attract the most solvent customers with the most savings.
- New housing emerges as competition for second-hand housing. Despite the fact that used housing is the driving force behind the market, the supply of new homes has grown in recent years and this means that buyers expect prices for previously owned homes to fall even further.
- Housing is once again a refuge value. In Spain, housing has traditionally been our form of saving, and now “even more so given the scarcity of options in which to invest, and the doubts that exist about the future of pensions”, adds Duque.
All the data points to the fact that the predicted falls will reactivate the sector with the entry of national investors as well as foreign capita who are already analysing the sector – retail and hotel residences – in search of bargains. “We think that the end of the year will be the time when most of the operations we are working on will materialise”, concluded the Alfa Inmobiliaria executive.