Outlook For The Spanish Property Market In 2024
Buying property in Spain remains a very popular option with people looking to move there to enjoy the climate and lifestyle as well as with people looking for a holiday home or investment opportunity. 2023 saw the Spanish property market exceed expectations with record levels of international buyers. What are expectations for the Spanish property market in 2024?
Kyero, the property portal, reports that the year has started with a heavy dose of positivity in the Spanish real estate market.
According to data from the official site Spain’s notaries – Consejo General del Notariado – January 2024 vs 2023:
- Property Sales were up 7.3%
- Property Prices were up 4.2%
- Mortgages Issued were up 7.6%
Spain saw a 7.3% year-on-year increase in residential property sales this January. These official figures also reveal that during this period, both property prices and mortgage loans approvals also experienced growth of 4.2% and 7.6% respectively.
Across Spain, home sales increased in fourteen Autonomous Communities while declining in the remaining three. Notable increases were observed in Cantabria (37.9%) and Galicia (23.2%), whereas the Canary Islands experienced a notable decrease (-5.0%).
The price per square metre rose by 4.2% year-on-year. Significant increases were recorded in the Balearic Islands (18.4%) and Galicia (15.3%), while La Rioja saw a substantial decrease (-25.1%).
Mortgage loan approvals for home purchases increased by 7.6% year-on-year. Thirteen Autonomous Communities experienced growth, led by Cantabria (44.8%), Galicia (23.5%), and Castilla-La Mancha (17.4%), while La Rioja (15.0%) saw the most significant decline among the four regions with decreasing figures.
WTG Spain comment that the increases in the Mediterranean regions were driven by international demand as these are the regions popular with foreign buyers.
They state that Spain’s property market outperformed expectations in, 2023. Despite the rise in mortgage rates globally Spain’s market was resilient especially with the number of foreign buyers and investors. Demand outstripped supply and provinces like Alicante saw around 40% of properties sold to foreigners.
Around 600,000 homes are sold annually in the Spanish market with an average of 100,000 of these being new units. However, Daniela Gnecchi of The Real Estate Bee, reported that in 2023 there were 80,000 new homes, and that the forecast for 2024 is around 60,000. Spain constructs one of the lowest number of homes per thousand inhabitants in Europe. New housing is therefore expected to be a scarce commodity, and this scarcity is likely to offset the reduction in mortgage accessibility.
Daniela says that property transactions may decrease by 10% in 2024, but the average purchase price is expected to rise between 1% and 3% .
In 2024, The Real Estate Bee foresees two critical scenarios in Spain’s property market:
- Reactivation of demand from buyers who were unable to secure mortgages due to high rates. With decreasing rates predicted, these set of buyers will sharply increase demand.
- A well-established interest in new constructions, particularly as demand for properties greatly exceeds Spain’s current supply.
Mark Stucklin of Spanish Property Insight commented in an article in Olive Press that there are no obvious reasons why the market might lurch up or down in 2024, with it more likely to track sideways at the current level.
Looking at 2024 Stucklin says that it looks like interest rates have peaked, and the Bank of Spain forecasts continued economic growth, albeit less than last year, and lower inflation than the last two years, all of which should support local demand.
He says that on the foreign front, the 2020s baby boom retirement surge will continue to increase the number of northern Europeans thinking about retiring to the sun.
In the absence of some nasty shock, he expects the Spanish housing market to lose a bit of altitude in 2024, but nothing to write home about.
Overall the consensus seems to be for the supply shortage to result in stability and modest growth in the volume and prices in 2024. The impact of international buyers may result in significant regional variations.
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