The pound ticked on Thursday as GBP investors cheered the Bank of England’s (BoE) new economic forecasts.
With many countries now relaxing restrictions imposed due to the severity of the pandemic, including Spain, the property market can start moving. But how will, and how has the crisis affected property prices in Spain?
Brits and the property market in SpainSpain is an incredibly popular location for Brits to purchase property abroad. Data from December 2019 and January 2020 showed that Britons were the top buyers of Spanish property. But what does that mean for Brits who want to purchase property abroad now?
A survey from Mark Stücklin of Spanish Property Insight, showed around three-quarters of respondents expect the virus’ impact on the Spanish property market will be temporary. Although a small percentage believe the pandemic will cause more lasting damage.
On the face of it, with lower property prices now might be a buyers’, not sellers’ market. But what is general opinion about the Spanish property market post-coronavirus?
Is it a good time to buy in Spain?The short answer to this question is yes. If you are in a position to purchase a property in Spain, then now is a great time to jump in.
Spanish property site, Idealista has noted that in the short and medium-term house prices in the country could plummet from anywhere between 9% and 20%. Although many expect the impact of the coronavirus will not be drawn out for as long as the 2008 recession, which is great for buyers and reassuring for property owners in Spain.
For British buyers, now might be a great time to look for a property. You have the benefit of lower property prices as well as the incentive of Brexit to complete your property purchase before the end of 2020.
In the survey from Mark Stücklin, over half of respondents expect buyers to wait until house prices decrease and for bargains to start appearing as second homes are non-essential items that are usually liquidated first.
According to Stücklin:
‘It’s not farfetched to expect some incredible bargains to emerge in the next six months or longer, some of them on the market, some off-market. A crisis like this, which is not a full scale melt down like a world war, and will pass relatively quickly, is always going to be a disaster for some and an opportunity for others. A sad fact of life.’
Will house prices fall this year?Estimates show there could be up to 20% off property prices in Spain this year. According to industry insider and President of Remax in Spain, Javier Sierra, both sales and house prices will fall by around 10% and 30% this year, while banks are expecting a decline of around 6%.
In an interview with Spanish property portal Idealista, Sierra noted:
‘We mustn’t forget that the real estate market takes time to adjust because sellers need time to find out at what price they should sell at, and the same happens to people who need to buy.
‘But in the end, in the medium term, what will happen is that this year there will be fewer transactions, between 10% and 30% less, and therefore house prices will adjust according to [local] markets; at present we expect an average fall of between 10% and 20% this year.’
Is it a good time to sell property in Spain?If you already live in Spain and are looking to sell your home, in terms of value, it’s you probably won’t gain or lose out.
However, if you are just looking to sell and move on, it looks like it will pay to wait.
While your own house price will have dropped, so will other property in Spain, meaning you won’t be losing out. Although, it could be risky and take some time to find a buyer for your own property while the market slows.
However, an increased demand from foreign buyers could limit the dip in property prices in Spain. In recent years, foreign investment dropped as property prices in Spain rose.
With the forecast drop in Spanish property prices, it could spark an increase of foreign buyers again, especially if currency exchange rates favour the buyer.
Is the coronavirus pandemic the biggest threat?While the coronavirus pandemic has caused chaos in all areas of life, including the property market in Spain, another worry is Brexit.
Some expat buyers from the UK have been looking to resettle in Europe as Britain approaches the December 2020 deadline.
This could be a good thing for the property market this year as many investors and buyers may be eager to get onto the property ladder in Spain.
Is a property in Spain a good investment?If you wish to invest in a property in Spain now, it is worth keeping an eye on the market for a drop in house prices as recovery could be faster than expected.
While the crisis has been a huge shock to life, it is highly likely this is a passing crisis and the market will soon recover. The market was left at a standstill as Spain was hit hard by Covid-19 and became one of the first countries in Europe to impose strict lockdown measures.
This could mean the market will remain fragile for the time being, but it is likely to bounce back. It is worth noting that if the pound exchange rate makes gains in the aftermath of the Covid-19 crisis, Spain will become an even better investment for buyers.
As we continue to feel the effects of the coronavirus crisis, it may feel like there is no perfect time to dip your toe into the Spanish property market as the situation in Europe changes rapidly.
However, forecasts suggest the dip in house prices could be short and optimism surrounds economic recovery. So now could be the time to invest in property in Spain, but with careful monitoring of the changing coronavirus situation, Spanish property market, and value of the pound to euro exchange rate.
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