Barcelona Real Estate Market Report Part 2

  • The Spanish property market is expected to grow. Last year in 2021, a total of 545,000 transactions were completed.
  • According to statistics published by the central bank of Spain, an average return of + 7% is expected from the housing market. Ultimately providing massive financial return for investors.
  • Spain’s return on investment has been growing since 2010 at an average of 4.3% to 6.8%. This upward trend is expected to continue into the foreseeable future.




Mortgage Lending: 


  • The pandemic had little impact on Spanish mortgage financing, but it may have sparked a borrowing frenzy.
  • The following graph depicts the annualized change in mortgage lending since the beginning of 2020.
  • The pandemic-related reduction was restricted to the lockdown months of March to May 2020, with lending increasing again by July 2020.
  • Comparisons with 2020 are irrelevant due to the pandemic. If we look back to 2019, we can observe that mortgage lending volumes rose by 31% in the first quarter. This indicates that the market was rising.




Mortgage Lending: Regional 


  • Lending increased across Spain in the first quarter but was especially robust in the Canaries (+29%) , the Balearics (+20%) , and Andalusia (+19%) .
  • Most recent data show that mortgage lending is expanding rapidly in coastal areas. Loan values ​​grew by 4.1% nationwide to an average loan value of €151,129 .
  • The average loan value has now climbed for ten consecutive months, indicating that banks are comfortable offering larger loans.





Rising Interest Rates: 


  • The 12-month Euribor rate, which is typically used for Spanish mortgages, concluded the quarter at ( -0.232%) before turning positive in April (0.021%) .
  • It is evident that interest rates will continue to increase as the ECB attempts to contain inflation.
  • The rise in interest rates explains the sudden surge in mortgage lending. Borrowers want to lock in fixed-rate mortgages before borrowing costs increase further.




The Foreign Buyers:


  • The Spanish real estate sector has historically been viewed by foreign investors as having extremely high economic potential .
  • According to Anna Puigdevall, who represents the International Real Estate Federation (FIABCI) , the prices of Spanish real estate are highly competitive compared to other parts of Europe. This indicates that foreigners consider Spain as an investment opportunity .
  • According to FIABCI data, Madrid and Barcelona are the most popular investment destinations, but investors have long shown considerable interest in the Mediterranean region.
  • According to the worldwide consulting firm Knight Frank, Spain will be one of the five European countries with the highest investment attractiveness in 2022.
  • According to data from the Spanish Land Registry Association, foreign demand for property in Spain increased by 73% in the first quarter.
  • There was a 40% increase in foreign borrowers . 36% increase in the number of nationalities buying in Spain with mortgage, and a 37% increase in average loan value.
  • Borrowing costs, on the other hand, appear to rise due to inflation .



Barcelona Property Market:


Barcelona is a well-known city with a wonderful location on the Mediterranean coast, presiding over a prosperous and fertile getaway region between France and Spain.

The remarkable scenery and culture of the Catalan city draw about 10 million tourists annually, placing it among the top 20 tourist destinations in the world.

Barcelona has drawn a lot of second home buyers and investors over the past few decades, as well as a growing number of expats who are choosing to make the city their permanent home.

The city provides numerous offers such as economic and lifestyle benefits, including first-rate healthcare and education.



Sales Information:


The Barcelona real estate market is robust right now, with sales exceeding those of 2018 , with foreign demand rebounding following the epidemic. This can be seen in the graph above

  • Spanish home sales surged by 16% in April, marking the 14th straight month of double-digit growth in a post-pandemic boom.
  • According to the Spanish Notaries’ Association, there were 60,734 home sales witnessed in April. 234,808 in the first four months of the year.
  • This Shows a 16% increase over the same month last year and a 20% increase this year so far.



Price Information:


  • According to official data, housing values ​​in Barcelona province fell by between 2% and 3% when the epidemic began in 2020, and by 1% in the first quarter of 2021.
  • Prices in Barcelona had been slowing following years of fast increase before the epidemic, therefore the impact of the pandemic on prices is not as apparent as in other locations.



Market Observation: Conclusion


  • House prices in Barcelona remain low and excellent value by worldwide standards, but this will not last long as demand outstrips supply.
  • According to government estimates, house prices began to rise in the second half of last year.
  • The development of digital nomads continues to increase demand for Barcelona properties.
  • Interest rates continue to rise and would be advisable to take advantage of the low financing costs .
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