If you are wondering when the right time to buy a property in Spain is because of the coronavirus crisis, Standard & Poor’s has reported that the window of opportunity won’t last as long as many are hoping for.
One of the expected consequences of the coronavirus crisis on Spain’s economy is a marked drop in the price of properties, once government aid packages are not propping up the labour market and the full extent of the pandemic’s consequences are known.
Different real estate experts, from popular property search engines Idealista and Fotocasa to market trend analysts, cannot seem to agree over just how sharp this price reduction will be if there will be one, and when house-hunters in Spain can expect to see genuine bargain prices.
US credit rating agency Standard & Poor’s has been the latest to provide its findings on the matter in a report into what it expects to occur throughout the housing market in the main European countries during the coming years.
Spain stands out in this report as S&P forecasts that the Iberian nation will go from being one of the countries where prices fall the most because of the coronavirus crisis, only to then be among the markets where housing will become more expensive.
According to their figures, the fall in property prices in Spain this year will be 1.4 per cent, the second steepest decline after Ireland’s forecasted 1.6 per cent drop.
Portugal is the other European country where a price fall is expected (-0.5 per cent) in 2020 whereas S&P believes that in France and the UK housing will become more expensive by around 1.5 per cent, in Italy, it’ll rise by 0.5 per cent, in Belgium by 1.8 per cent, while in Germany and the Netherlands the upswing will be around 4.5 to 6 per cent.
So, while the trend in most of Europe’s biggest economies is for house prices to rise during this pandemic. Throughout Spain, it’s the opposite, an outcome which is in line with the IMF’s October report naming the Spanish economy as the most affected of all major economies globally (a GDP drop of 12.8 per cent so far).
It is worth noting that a 1.4 per cent price drop is nowhere near the plummeting rates seen in Spain in 2014 during the height of the previous financial crisis, where properties cost 35 per cent less on average than in 2008.
However, S&P estimates a rapid rise in house prices in Spain which will reach 1.8 per cent already in 2021, in line with the rapid increases predicted for Sweden and Germany occurring next year.
By 2022, Standard & Poor’s expects a sharper rise still in terms of house prices in Spain – up to 4.5 per cent – only surpassed by the 4.6 per cent predicted for Ireland and 5 per cent in Portugal.
As an example of this, Bankinter’s latest property report predicts a 9 per cent drop between 2020 and 2021.
When it comes to property hunting, it seems that the most effective tool that someone can use is their research geared towards their own specific needs, goals and not least local knowledge as all regions are differing.
November 29th, 2020. By Niels Andersen founder and CEO of Qlupa Global.