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We know that 2022 was a very volatile year in the economic arena. This is due to various global factors that have impacted and continue to impact many economies. Before we can analyze the behavior of the real estate market, we need to know how the socioeconomic sector is doing in Spain.
Spain is recovering slowly and achieved a GDP growth of 5.5% in 2022. The Bank of Spain forecasts growth of 1.3% in 2023, 2.7% in 2024 and 2.1% in 2025. As for inflation, Spain recorded an inflation rate of 5.6% at the end of December, the lowest in the eurozone, which recorded 9.2% in the same month. However, the unemployment rate rose to 12.7%, an increase from the third quarter of the year.
In contrast to many other countries in the European Union, real estate prices in Spain have continued to rise, but at a slower pace. Despite the macroeconomic instability in which we currently live, Spain has registered a total of 550,992 sales and purchases through October 2022, according to INE (Instituto Nacional de Estadistica) data. The communities where most property purchases were made were:
It can be seen that the greatest interest in the demand for housing is found in the provinces near to the sea, with the exception of Madrid. In what follows, we will examine whether this demand for housing comes from national or international buyers.
Foreign buyers account for 19.5% of total real estate transactions in Spain. The municipalities most requested by foreign buyers were: Balearic Islands (41.4%), Valencian Community (37.6%) and Canary Islands (35.8%), confirming the interest of foreigners in areas near the sea.
As mentioned above, house prices rose by 3.3% at the national level. However, there are autonomous communities where prices have increased more than the national average, some of them are: Balearic Islands (8.1%), Navarre (6.0%), Madrid (5.2%) and Valencian Community (5.1%).
The demand for rental properties in Spain is constantly increasing, resulting in an excess demand for the current supply of properties. According to Spain’s leading rental portal (Idealista), 15% of properties in Spain were rented in less than 24 hours. The cheapest rents are those that are less than EUR 750 per month. However, in cities such as Palma de Mallorca and Valencia, there is high demand for rents between 750 and 1,000 euros. One of the capitals with the highest number of express rentals was Valencia (20%), followed by Las Palmas de Gran Canarias (18%) and Zaragoza (17%). If you would like more detailed information, you can find itherefind it.
This data shows how tight the market is and and the lack of current supply. Therefore rents increased significantly higher than inflation in 2022. The rent price has increased by 8.4% at the national level, two points more than inflation (5.6%). The cities with the highest increases were: Barcelona (25.7%), Alicante (23.5%), Valencia (20.9%), and Malaga (20.7%).
After getting an overview of the development of the real estate sector in Spain, do you want to invest and earn a passive income or simply own a vacation home that you can use profitably? Arrange here a free consultation with us, we will be glad to help you.
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