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Unconvering Experts Predictions: the Spanish Real Estate Market 2024

Spanish real estate market 2024
6 Jan 2024
The Spanish real estate market has been a focal point of interest for investors, homeowners, and real estate enthusiasts alike. In 2023, the market experienced a bumper in sales, but prices managed to remain stable. 
As we venture into 2024, it's crucial to examine the trends, shifts, and expert predictions that will shape the landscape of real estate in Spain.

Reviewing 2023:

In 2023, the Spanish real estate market experienced notable developments. High interest rates tend to slow the housing prices down, but even though the rates reached as high as 4.5% in 2023, Spanish real estate continued to be valuable. Especially in the Valencian area, there have been up ticks that are at least in line with inflation.

Housing prices witnessed a steady increase, driven by factors such as economic recovery, the need for homes with workspaces after the pandemic, and increased demand over supply. Regions like Torrevieja, Javea, Ibiza, and other coastal areas saw particularly large growth. 

Spanish Real estate Market 2024 Hansson Hertzell

Current Spanish Real Estate Pricing Trends:

As we step into 2024, the pricing trends continue to reflect a resilient market. The demand for housing remains strong, especially in urban centres and popular coastal regions. Spain's economic recovery, after the pandemic, is fostering a positive environment for real estate transactions.

Urban regeneration projects are influencing pricing dynamics, with renovated properties commanding a premium. The lack of supply in new built properties currently favours resale bargains. 

Additionally, rural and suburban homes with space and amenities are gaining traction, aligning with the growing emphasis on the need for a different property type after the pandemic. Natural appeal seems to have taken the interest of many buyers.

Spanish Real estate Market House prices 2024 Hansson Hertzell

Influences on the Spanish Real Estate Market:

Several factors shape the Spanish real estate market in 2024. Economic stability, interest rates, and government initiatives continue to play a pivotal role. The influx of foreign investors, drawn by Spain's lifestyle and investment opportunities, adds to the market's dynamism. 

Global events influence the market as well, with both positive and negative results. Positive, in the sense that Spain seems to be residing well in the current global climate, making it an attractive option for Northern European countries and the United States. However, ongoing events affecting interest rates, the facilitation of mortgages, and easy transactions, are unfavourable.

Predictions for 2024:

2022 counted the highest amount of purchases since 2007, the peak of the last property cycle. Nearly 720,000 homes titles were changed as demand skyrocketed. In 2023, the sales have been consistent so far, because of the earlier mentioned strain on lending conditions.

However, experts predict that the Spanish real estate market will sustain a positive momentum in 2024. With economic growth expected to persist, housing demand will likely remain robust. Urban areas will continue to be hotspots, but suburban and rural properties will also gain prominence, like we explained earlier. 

The integration of smart home technologies and sustainable features is anticipated to become a standard in new developments. Co-living spaces, designed to meet the evolving needs of modern lifestyles, may see increased popularity. Commercial real is estate is also predicted to gain traction, as the growing economy continues to attract foreign investors.

An interesting matter is that the chronic lack of supply in highly sought-after locations might open up a new door to earlier undiscovered real estate deals. Spain's largest cities and tourist areas like Barcelona, Madrid and Marbella are affected by the large demand through high prices. This year we might see a shift towards coastal areas that are still internationally connected, such as Valencia, Alicante, and other smaller communities situated on the North Costa Blanca.

In the same way, the lack of readily available new construction, might inspire people to focus more on already complete resale properties. Local realtors are already seeing an increase of interest in renovated properties, and the classic Spanish finca.

Spanish Economy growth 2024 Hansson Hertzell

Mortgages interest rates in 2024:

Looking forward to 2024, there are optimistic signs, with inflation back at 3.5%, and the European Central Bank has kept rates at 4% for the second month consecutive, after 10 previous increases in the inflation rate (from July 2022 to September 2023).

Mortgage Direct, a mortgage provider, observed a notable increase in demand for non-resident mortgages in Spain in 2023, possibly due to more attractive interest rates compared to other countries.

Projections suggest a decrease in EURIBOR rates, stabilization, or a decline in interest rates, and an expected stabilization of the real estate market. ING anticipates a drop in the ECB’s maximum interest rate to 2.5%, while Bank inter assures a 12-month EURIBOR of 2.2% by the end of the year.

The banking sector is adapting to innovation in mortgage products to remain competitive, reflecting stability. Valencia and Murcia highlighted as promising investment areas in the Spanish market. The conclusion emphasizes a positive outlook for the mortgage market in 2024.

Spanish Real estate Market Euribir rates 2024 Hansson Hertzell

EURIBOR Evolution in 2023

2024 in a nutshell

Key takeaways for next year include:

·         Stable prices, with possible up ticks in areas such as Costa Blanca hotspots and Ibiza

·         A continuation of high interest rates.

·         A positive prediction for the mortgage market.

·         An even wider gap between supply and demand.

Recommendations for Smart Purchasing:

 1. Location: Consider diversifying your real estate holdings across different regions. While Cities like Barcelona and Marbella are historically known for their potential, explore areas like Valencia and Alicante, which may offer lucrative opportunities due to relative supply and international connections.

2. Stay Informed on Interest Rates: Keep a close eye on interest rates, which continue to play a significant role in the Spanish real estate market. The expected continuation of high interest rates may impact affordability and influence the overall property market dynamics.

3. Explore Resale Opportunities: Due to the chronic lack of supply of new constructions, consider changing focus to already complete properties. 

4. Be Prepared for Supply-Demand Dynamics: Acknowledge the widening gap between supply and demand. This trend may lead to unique opportunities, especially in areas where demand is surging. Stay flexible in your approach and be ready to adapt your strategy based on evolving market dynamics.

5. Be Open to Suburban and Rural Properties: Recognize the growing prominence of suburban and rural properties. The post-pandemic shift towards remote work has increased the appeal of spacious homes in tranquil settings. Explore areas with a balance between connectivity to urban hubs and a peaceful lifestyle.

6. Embrace Sustainability in New Developments: The integration of smart home technologies and sustainable features is becoming standard in new developments. Look for properties that align with these trends, not only for their eco-friendly appeal, but also for their potential to attract future modern, environmentally-conscious buyers.

7. Navigate Urban Regeneration Zones: Urban regeneration projects continue to influence pricing dynamics. Explore properties in revitalized urban areas, as these locations often offer a mix of modern amenities and potential appreciation.

8. Consider Commercial Real Estate: Explore the potential of commercial real estate as a smart investment. Spain's growing economy is attracting foreign investors, and investing in commercial properties may offer diversification and long-term gains.

9. Consult Local Realtors: Engage with local real estate experts to gain valuable insights into regional trends, upcoming developments, and undiscovered real estate deals. Their knowledge can guide you towards profitable investments and help you navigate the nuances of the Spanish market.

Remember, staying informed, embracing diversity, and understanding the specific influences on the Spanish real estate market in 2024 will position you for a successful and strategic investment journey.

(Sources: BBVA, Tinsa, Business Insider, El Mundo, Euribor rates)

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