The Spanish real estate market continues to show significant strength, suggesting further growth in the coming years. However, to understand this trend, it is essential to look at the figures in a broader context due to the distortions caused by the Covid and immediate post-Covid period.
Understanding the Covid/post-Covid context is crucial for interpreting market data accurately. Analysts are now comparing current data with years before 2020, rather than comparing it to the immediately preceding years, as the economic behavior during 2020-2022 was heavily influenced by the pandemic and its aftermath.
When looking at the big picture for Spain, it may seem bleak at first glance. Home sales fell by 9.7% in 2023 compared to 2022, with a decrease in the rise in house prices. However, these numbers are distorted by the surge of pent-up demand in 2022 post-pandemic. When compared to 2019, home sales in Spain have actually grown by 16.1%, indicating a positive trend.
In Malaga province and the Costa del Sol, home sales have also seen a decline from the peak in 2022. However, when compared to pre-pandemic transactions in 2019, there has been a 15.9% increase, showing a healthy growth rate. The decline in home sales may be attributed to a lack of supply rather than a drop in demand, according to experts.
Luxury homes play a significant role in driving the real estate market in the Costa del Sol. The region has seen a surge in luxury home purchases, with prices in the super-luxury range increasing by 10-20% since 2021. Foreign ultra-high net worth investors are attracted to Spain’s favorable climate, lifestyle, and good value compared to other prime European destinations.
Foreign buyers have had a positive impact on the market, with foreigners making up a third of all home purchases in the Costa del Sol’s golden triangle cities. The British lead the ranking of foreign buyers, followed by Swedes, Dutch, and Belgians. The recent world events, such as the war in Ukraine, have also influenced the demand for properties in Marbella.
Despite the rise in house prices, especially in coastal regions, they have remained stable and have grown above the rate of inflation. Factors such as the low starting point of prices, sustained growth in tourism, and the lag in new construction have contributed to the upward pressure on prices.
Looking ahead, the market has passed through a period of readjustment from the pandemic era, and demand remains high. While there are some challenges ahead, trends in the real estate market suggest that prices will continue to grow steadily in the coming period. Overall, Spain’s real estate market shows resilience and potential for further growth in the future.
