After several months of pandemic, the real estate sector gradually recovers its activity. This is revealed by official data such as the Real Estate Activity Registry Index (IRAI) of the College of Registrars, which shows how during the third quarter of 2020 the indicators related to property, transactions or mortgages are going up after the contraction that occurred during the confinement, with an IRAI of 103, 6.39 more than the one registered the previous quarter of 96.8.
Similar perspectives to the latest statistics published by INE, which reflect how the sale of homes in October stabilized at 37.6 thousand operations, well above the figures for the months of April, May and June, which did not exceed the 27,3 thousand operations. However, despite this context of slight improvement, the situation in the real estate market is still quite different from the one before the pandemic.
Although it is still too early to make estimates, everything indicates that this year will be decisive for the sector. Above all, with regard to the price adjustment, which has not yet undergone notable variations despite initial forecasts. The reason is that this indicator tends to lag behind the economic cycle, and it will not be until next year that real trends begin to be identified, especially with regard to second-hand housing. This fact, together with other developments in the sector, such as the increase in technological functionalities and digital services, the transformation of housing needs when looking for a new property, the emergence of teleworking or a greater interest in enjoying rural areas, make the first months of 2021 the perfect time to take the step and acquire a new property.
We will here detail six good reasons why you should consider adding a home purchase in Spain to the list of 2021.
- Good buying opportunities in new construction.
After the pandemic, buyers are looking for larger homes, ideally single-family, with outdoor areas such as terraces or balconies, with more community services such as gardens, swimming pools or recreational areas or energy efficient speaking. All attributes that new construction homes meet. Although the prices in this case will not adjust too much and will remain stable. In addition, considering the boom in teleworking, buying a property in peripheral areas, where the cost of these properties is much lower, will allow you to take advantage of the great opportunities that this market presents.
- Much more affordable downtown location homes.
For those who prefer to enjoy central locations and, at the same time, spacious spaces, more light, extra rooms for teleworking, and even energy efficiency, there is also the option of acquiring a second-hand property at a good price and making reforms. And it is that the price adjustment will be perceived, especially, in used housing. In fact, the decompensation between the two markets is already visible. The latest figures from the INE Housing Price Index, pertaining to the third quarter of 2020, reflect an increase of 0.8% in this type of assets (+ 7.5% in new construction). However, for next year, we foresee an adjustment of around 5% in second-hand housing and the stabilization of the value of newly built properties.
- Greater digital functionalities for the purchase.
Smart market analysis tools, alert services, use of filters, good quality photos, videos, mortgage simulators, etc. All these functionalities facilitate and provide higher quality to the search for housing. In addition, in the case of visual resources, they help to get a first idea of the property and avoid unnecessary travel.
- Properties continues to be a profitable asset to invest in.
According to the estimates of the Bank of Spain for the third quarter, housing is one of the few assets that offers a notable positive return and that may still have an upward trend. Although profitability has suffered a decline as a result of the crisis, now standing at 5.6%, compared to 6.8% before the pandemic, it is still an asset through which we can continue to make profits, especially through rental.
- Lower mortgage interest rates.
The low interest rates offered by banks will be maintained and will continue to be an incentive for buyers with resources to acquire a new property and take out a mortgage. Even so, banks continue to maintain their strict conditions when facilitating this type of concession. Even more so in a context of economic uncertainty, when banking entities have to abide more than ever by these requirements, in order to ensure that the applicant has sufficient financial solvency to face the mortgage loan.
- Second homes in areas with little population.
The recommendations for social distancing and the search for places with fewer crowds have changed the perspectives when choosing a place for the second residence. To disconnect or even telecommute, provinces and municipalities with less population are now much more valued, located in areas where escaping to nature is feasible and with a lower rate of contagion. To these factors is added the price adjustment of the properties located in these areas, which can also be a good bet for investment in the future. An example of this is that the average appraised value of housing fell in the third quarter of 2020 by 2.9% and 3.3% in coastal and rural provinces, according to the latest data from the Ministry of Transport, Mobility and Urban Agenda.
To sum it up we believe that the property market in Spain has never been more interesting for international buyers. Many first-class properties for sale at interesting prices to which sellers are ready to negotiate. But we are not going to witness large falls in prices, since second-hand housing is currently -37% below the maximums and has not recovered its maximum value yet. So those who buy property in Spain during 2021 will certainly make a great investment on the long run.
We look forward to seeing you in Spain.