The crisis years began in 2007, and it was a few long years before both ordinary Spaniards and foreigners started buying homes again (however, investors bought in principle immediately during the downturn). However, interest in the Spanish housing market got off to an explosive start already in the first half of 2014 and sales have more or less gone straight up since then, but still never reached the same levels as before the financial crisis. However, it took several strong steps forward in 21/22 and then stood a little more still in 2023. From 2024, when the ECB begins to gradually lower interest rates, a new exciting chapter begins with several fairly clear tendencies.

The market gravitates mainly towards Malaga , and buyers prefer new development to used. However, the current crisis with energy/inflation has made it more difficult for construction developers to implement their projects, which means that less is being built than there is demand for. This will result in strong price increases in the long term, but also great opportunities for those who have capital.

Price trends in the Spanish housing market

During 22/23, the price increase was modest.

If we look back a little further, to 2020 and just before the pandemic, average prices in the country rose by 6.5%. First there was a drop in prices caused by the coronavirus, and then a subsequent recovery and a sharp rise created by many seeing Spain as a perfect refuge in the new reality where you can work remotely. In addition, a lot of positive things are happening in the country, its investment in tech and sustainability etc. in combination with continued relatively low property prices has made international investors interested in this housing market.

Looking even further back to 2007, we can see that average house prices, for the country as a whole, are still significantly lower than they were 15 years ago and haven't recovered much since bottoming out in 2013.

If we study the price development in the regions most interesting to foreign buyers, the pattern is somewhat different. Prices have more than recovered in the Balearic and Canary Islands, almost recovered in Madrid, but are still lower in Andalucia (Marbella, however, has surged in price, and Malaga city is now more interesting for investors as the city is expected to follow the same price trend in the next few years), Catalonia, the region of Valencia and Murcia.

Andalusia is now considered a tax haven and very business-friendly

Andalucia is gradually lowering taxes on housing purchases. The ITP tax on used homes is now 7%. Previously it was at 8, 9 res. 10% depending on price range. The tax cut thus primarily stimulates housing in the higher price range. As regards the fees on new development the AJD is 1.2%, previously 1.5%. Spain and in particular Andalucia is lowering taxes overall and is now one of the areas in Spain with the absolute lowest taxes. In addition, places like Nerja have introduced new laws with the aim of cutting back on the otherwise cumbersome Spanish bureaucracy. All this in combination with the area's generally large investments in Sustainable tourism, strengthening of infrastructure and various improvements and simplifications for international companies but also individual "digital nomads" make the area very interesting to invest in. That Google recently decided to relocate its important headquarters for Cyber ​​security for Malaga has led to talk of a "European Silicon Valley":

Read more about new tax rates and tax laws for the year in Spain.

Regarding reduced interest rates in Spain and the number of future sales:

In November, the market estimated that interest rate cuts would only take place from summer 24, but now more and more people believe that the first reduction from the ECB will come as early as March. It is also believed that there will be stronger and more reductions in the interest rate than expected in 2024.

In the first quarter of 2022, there were 164,999 residential transactions in Spain, which is an increase of more than 14% since the last quarter of the previous year. In fact, it is the highest figure since the beginning of 2008. There were also 30% more purchases by Swedes than the previous quarter. At the same time, prices rose by 3.1% in the first quarter (although prices fell by 1.2% in the Malaga area). During the second quarter, sales increased by 8% compared to the previous year. In June, the increase was 4%. Mainly, sales then slowed down in the Madrid region.

In the first half of 2022, a record was broken in the number of foreign buyers in Spain. 53% more compared to the previous year. A total of 72,987 homes were sold involving a foreign buyer. This is the highest figure reached since measurement began in 2007. Foreign buyers account for a whopping 20.3% of all home purchases in Spain. During the second half of the year, however, the buyers waited, which has been a global phenomenon. Some markets (such as the Swedish one) may take a long time to recover, but Spanish housing sales are expected to increase significantly again from the first or second half of 2023. Sales in the last quarter fell by around 10% (however, the decrease of non-Spanish only 1.2%) compared to the previous year but it is too early to draw conclusions about it as it was expected. The year before there was a huge pandemic effect.

On March 23, the final statistics for last year were published. Sales to foreign buyers are at a record high. The yearbook says that total foreign demand was 13.75% of the market (in Malaga, foreigners account for almost 35% of purchases!), which would mean 88,858 sales, while last quarter data suggests 94,481 sales and 14.62% of the market , up 58% compared to the previous year. There remains strong foreign demand for property in Spain, although quarterly figures from registrars also point to a slowdown in the rate of growth in the second half of last year, suggesting 2023 may not be as good given rising interest rates. However, compared to many other global markets, the Spanish market is in a strong upswing phase in the medium and long term.

Prices continue to increase, although they are now increasing more slowly. On an annual basis in 2022, prices rose in the first half of 22 by 7.9% on used and 8.1% on new development . Overall, house prices in Spain increased by 8.8% over the whole year (Q4 was up 2.5% so the increase is continuing). The pandemic/war/inflation (which is lower in Spain than Sweden though) did not slow down the rising price trend that has been going on since 2014. The price of Spanish housing fell significantly since the crisis in 2008 but in 2023 is still 18.7% down compared to the record level in 2007. Since then, a lot of positive things have also happened in the form of regulations, development of infrastructure, investment in eco-tourism and hiking trails, etc. The Spanish housing market will have a strong 20s. The building agency APCSepaña believes that it is mainly the desire for new development that pushes up prices, and of all the homes that are ready in 2023, 80% are already reserved!

As for concerns about inflation and supply difficulties in the construction industry, it has eased somewhat. We have spoken to builders who say that prices and delivery times are slowly but surely starting to "normalise". However, expect delays in new projects. It will be a long time between the grain and the bread for those who do not like the range of properties that are now up for sale (inc. off plan). We also believe that, not least because demand is still high, that the price increases on the projects if put up for sale starting next year will be significantly higher in price.

Spain recovered quickly from the initial paralysis associated with the quarantines during the pandemic.

Already in June 2021, 88.4% more homes were sold than in the corresponding period the year before. In absolute terms, the region posted the highest sales figure since June 2008! A total of 565,523 properties changed hands in 2021 on the Spanish housing market. This was the highest figure in 14 years.

In particular, during and after the pandemic, we saw a strong increase in sales in the luxury segment and in terms of new development . We also receive reports from colleagues around the country who are selling projects with new development to Spaniards in shorter times than seen in many years. In one of our latest projects at the end of the year, we also sold for the first time to the majority of Spanish investors. They have noted how it pays to buy off plan in recent years. It is positive that sales are increasing so quickly to both foreign and Spanish buyers, but watch out for the price trend. It can go faster than expected with it too. At the end of August 21, it was found that the prices of housing were 4.9% higher in July than same month a year before. Interest is also still high among foreigners despite the pandemic, even among Swedish buyers who are also getting younger.

Strong rental

The hotel operators' association showed that the occupancy figures for July 2022 landed at 86.29%, which can be compared to 2019 when the figure was 84.2%. It is mainly Nerja and Torremolinos that make you beat in 2019 as they raise the average. Nerja had the highest occupancy with over 90% (to compare with Marbella and other places on the west side which are just over 80%).

For four consecutive months, from June to September 2023, Nerja had a hotel occupancy rate of over 90 percent. The city's tourism manager: "Nerja has become a benchmark in the area. In terms of nationalities, the city has seen a strong influx of British, Spanish, German and Irish tourists.

Malaga leads the development

In Spain, much is now being written about the previously mentioned, exceptional development in Malaga, which at the beginning of the year was only behind Barcelona and Madrid in terms of investment. During Q4, there were also figures that indicated that for the first time ever, Malaga overtook Barcelona in the number of newly produced properties sold.

Rental prices are rising in Malaga in line with strong demand from foreigners

Rental prices are rising sharply in the province of Málaga and the Costa del Sol. Between 22-23, rental prices increased by 23 percent and ended up at 13.22 euros per square meter per month. Compared to 2007, the rent is now over 60 percent more expensive, when it was around 8.5 euros per square meter.

Increased prices for materials, and increased demand

At a large meeting between builders and major banks already in the fall of 21 (due to the start of construction for one of our projects), it was flagged that the prices of certain materials will rise by as much as 40% until the beginning of 22. They were right. This prophecy was thus made long before Russia invaded Ukraine . The same assessor now says that the prices of materials will drop sharply and that sales of new projects in Spain will boom in the future. However, the uncertainty associated with inflation has resulted in projects that are in the planning stage being delayed. Our advice is to buy new development early in the year as the price increase can be substantial in the summer and autumn. As far as used properties are concerned, we believe that the price picture will be relatively unchanged as the demand for used properties is getting weaker. The stock is simply starting to wear out. Also consider that relatively few homes were built after the 2008 crisis until the Corona pandemic. The situation after Q1 in Spain is that many banks have become increasingly cautious and promoters are finding it difficult to get financing despite the strong demand for new development . Historically, this usually means that when the underlying issues are resolved (what remains is a signal from the ECB that interest rate hikes have peaked, so watch for this sign) prices tend to rise high and fast.

New Development and luxury homes are what looms after the Corona crisis

We talk continuously with home owners, builders, investment funds, bank managers, land owners, etc. and gradually update the situation on the Spanish market during and after the Corona/inflation/electricity crisis. We also constantly negotiate with both landowners and construction companies about various projects and thus have a good grasp of the situation - from the banks' conditions, down to the price of nails! There are a lot of good opportunities for those who are awake in 2024!

Write to info@spanskafastigheter.se for more information about subcontracted objects and new development , and which segments and markets we think you should invest in in 2024.

New Development and luxury housing got sales going

Sales started faster than expected – already at the beginning of June 2020, before the country even opened its borders, and it was driven by temporary price reductions of 10-15% , in some cases more than that. However, most sales with price reductions took place "underhand" (that is, the owner did not want to publish the price reduction publicly) and there was not a high volume of these items. Since then, prices have more or less stagnated on many objects, while they have risen sharply on luxury objects ( large houses) which have become increasingly in demand. Above all, however, as I said, there is a great domestic and international desire for new development .

According to statistics from the property institute Registradores (24/9 2021) new development sales increased by 50% on the Costa del Sol compared to the previous year. During the same period, the sale of used homes has fallen by 4.6%, which can be explained by the fact that the stock is becoming old and worn, but also that prices have only fallen by 0.5% despite the crisis (prices have, however, risen slightly since that report).

We agree with the buyers. It is undoubtedly new development that applies in the future, but of course there are still good buys to be made for those looking for used as well. Although most people are now looking for new homes, the supply is limited. There will thus be a gap (when many building developers were low during the crisis, at the same time as once they realized that demand is stronger than in over a decade, there was a shortage of materials, inflation and a labor shortage) until newly produced housing in good locations comes out in 2024 Also expect that the prices for these will be significantly higher than for what is sold during 22/23

A short but intense buying window in the new development will open wide in 2024. This then concerns projects whose land prices were negotiated during the crisis, before it was realized that it would not last long [in terms of impact on the housing market], and which is managed by talented teams that managed to stock up on materials before the material shortage hit. Expect a strong risk of sharply increased prices for new development from summer/autumn 2024 onwards.

Now the buyers want new and fresh and environmentally friendly, so the situation regarding used objects is similar to the summer and autumn of 2019, when the sale of these slowed down significantly and several objects were only sold with price reductions of around 15% (compared to the year before). Many older homes simply need to be reduced in price to sell, but few sellers seem willing to meet buyers' demands. We will see if this changes during the year, but we see no indications of this.

Most expect sales to pick up again with the rest of the economy in Europe already in the first half of the year.

At the beginning of the Corona crisis, it was believed that a not insignificant proportion of housing, in various segments, such as holiday homes, luxury homes and smaller hotels would be sold at a reduced price for a period to come. However, it didn't turn out that way as the economy is more robust than expected.

Which areas attract the most buyers after the recent crisis?

Above all, it is, just like after the last crisis, Nerja (no other Spanish city attracts as much interest from investors from Swedish investors, due to the high occupancy and positive development) and the interest has not diminished because the municipality launched several infrastructure investments during the crisis on beaches and nature parks and culture. They have begun the renovation of hiking trails and streets, as well as the construction of a new large health center. Nerja is in an almost uniquely good position, and it will be exciting to follow its development over the next 10 years. See the best deals in Nerja here and now.

However, the city of Malaga is coming out strongest of all and will be the most attractive location in southern Spain for foreign buyers from 2024. Read more about Malaga's development in this article.

As for Marbella , it seems that interest in the area may grow again, provided prices drop. Right now the area is overshadowed by Malaga and the eastern Costa del Sol. Prices need to come down, and more interesting projects need to be launched with new development on the western Costa del Sol for it to become really interesting again.

Torrevieja and the rest of the Costa Blanca are more difficult to decipher. There was a lot unsold even before the crisis, and they have long been struggling with financial problems in several locations. The crisis can seriously affect that, but we simply have to wait and see what happens.

Prices in Spain rose steadily for 10 years but were still 30% lower than before the 2008 crisis when the pandemic hit

Official figures from the authorities show how sales fell during the crisis year 2020. It fell, of course, but not as much as analysts had expected under the circumstances. During the third quarter, sales to foreign buyers fell by 24.3% compared to the previous year, which is to be compared with the second quarter when sales fell by 50%. In any case, the pandemic year can be considered an anomaly, a statistical outlier that does not really say anything about the development. The advice is to study the numbers more long-term and above all keep in mind that internationally there is talk of a boom for "second home" sales in the wake of more and more people working remotely and having the opportunity to live in other countries if desired. In the Forbes list (November 2020) of the 20 most attractive destinations in the world, a total of three Spanish resorts ended up on the top 20 list: Malaga, Madrid and San Sebastian. This will drive up the prices of the most attractive homes in the long term as international buyers search in roughly the same segment: "sea view or no more than 1 km. from the sea, at least 2 bedrooms, at most one hour from the airport, terrace, close to everything but still secluded”.

Prices in 2019 were a little more stable compared to the previous year. However, reputable credit rating agency Moody's expected prices in Spain to rise 5.5% in 2020. Of all the countries they analyzed in Western Europe, Spain had the housing market that was expected to increase in value the most. Above all, it was Madrid and Barcelona that would leave. With hindsight, it was Malaga that developed the best. Interestingly, this was also something that happened in connection with the 2007/2008 crisis. The Costa del Sol is said to always be the first into and the first out of a crisis.

Prices in 2019 were still more than 30% lower than they were before the 2007 crisis (at the beginning of 2024 they are about 22% lower) This fact combined with continued low interest rates and the end of Brexit (many held off on investing due to that Brexit put everything in limbo) would, according to most assessors, lead to the number of purchases by foreigners in Spain breaking records again in 2020. For the Swedes, interest in Spain slowed down somewhat even before Corona, but then gained a renewed force. We believe this has several reasons. Partly because many feel that there have been so many crises in the world in the last ten years that "it will be enough to wait now. Now we buy" and that the Corona crisis triggered new projects with interesting new development . In addition, the krona strengthened against the Euro at the same time as the Swedish housing market recovered after a period of stagnation. This means that Swedish home owners can more easily release capital for the purchase of a home abroad.

Assessors thus believed that sales to foreign buyers would increase in 2020, before the crisis hit. However, the crisis has accelerated interest and exceeded pre-Corona expectations (even if there was something of a wet blanket over the market in 2023 due to the interest rate hikes), and the next five years in the Spanish housing market may, according to many, have a development that unparalleled. In particular for the Malaga area.

Housing Cooperative er is the solution for Spanish new development

A cloud of worry according to the Spanish analyzes is that the prices of plots and construction costs skyrocketed already from 2016 onwards. The same thing happened at a rapid pace from the mid-80s (resulting in a real bubble at the end of the decade). At the same time, the desire for new development great and more and more people are building ever larger projects, at ever higher prices. This leads to the possibility of "mini-bubbles" in oversaturated markets. The banks are thus becoming increasingly restrictive in entering into and financing new projects with new development . This caution of the banks, to finance new projects, has intensified after the economic slump in the wake of the epidemic. Those who can get hold of new development which is in the final phase or who have new development which has recently been completed are thus sitting on a golden egg as the demand for new development will be significantly greater than the supply for a relatively long period. In cases where the banks step in and invest, they require the projects to be more or less completely sold out before giving them the green light. This is an unsustainable situation and something must be done. More and more Spanish actors are therefore looking, among other things, at the proven project model Housing Cooperative er . This project solution involves depressed prices of more than 25% and it is considered to be legally and financially much safer than regular promotions for both the individual buyer and the banks and insurance companies that guarantee the buyers' payments. Read more about housing cooperative here.

About the development of recent years below:

In 2018, prices for used homes rose by just over 7% (on new development prices rose by 6.1%). It was then the highest increase since the third quarter of 2007. In the 5 years before the Corona crisis, the value of a Spanish home increased by an average of 5% per year and if you count reduced interest costs and the fact that the price of renting increased by 50% during the same period period, it meant a return of over 10% for those who bought the right home in the right area at the right time.

In 2017, 53,259 homes were sold to foreigners. The previous record from 2007 was 33,000 sales.

Sales to Swedes decreased by 7% in 2018 (in the first half of 2018, however, more Spanish homes were sold to Swedes than ever) due to the uncertainty in the Swedish housing market, and the low value of the krona. However, this did not affect the Spanish housing market, which was chugging along unconcerned. The number of purchases by foreigners increased by 5% between July and September, and overall the number of sales increased by 11.9%. In 2019, the numbers were very up and down, but still pointed upwards. In the first two months of 2020, many brokers reported that Swedes started buying at a record pace again. Then came Corona and sales ran into the wall when Spain was in quarantine. Then it went straight up again, already from the summer. Many analysts believe that the price increase for housing in Spain will be gradual and long, similar to what happened in Sweden after the housing crash in the early 90s.

In fact, the development is going so fast that as of 2019, the Spanish state established a new authority to prevent real estate bubbles . Already around 2012, many made the assessment, including us, that the market in Spain would rise rapidly and then have a long, steady price development similar to the one Sweden had from its property crisis in the early 90s onwards. However, the collective memory is short and prices and the number of projects with new development are rising faster than expected. The new state supervisory authority must prevent uncontrolled speculation, while at the same time giving the central bank greater resources to control the flow of credit.
What real consequences the new authority will have is difficult to say, but we would think that this could, among other things, mean increased taxes on new development within a few years.

Right here and now, however, there are no tax increases at the door, while fees for loans have been lowered, and the homes are valued increasingly higher (which affects the loan amount).

The housing market feels safer than shares - especially when there is inflation

Many investors are beginning to feel exhausted in the uncertain and capricious stock market and are looking for opportunities in real estate as an alternative. In addition, investors have long regarded real estate investments as a "safe haven" in times characterized by increased inflation.

Thomas J. Thornton, Jefferies, head of "US equity product management" had the following to say a few years ago about the American housing market (which in many ways resembles the Spanish one, they have followed the same cycles):

"Other than during the GFC (Great Financial Crisis), home prices have kept rising even during recessions, probably because rates fall, the vast majority of people retained jobs and household formation continues" ... "This could be a particularly big cycle for household formation owing to the millennials”.

CNBC picked up on Jeffries' comments and added "It [the housing crisis] was the center of the last crisis, but before that housing prices tended to hold up and even rise modestly during an economic downturn as mortgage rates fell in tandem with interest rates. If history is any guide, the housing market could be the unlikely safe haven in the next recession once again.”

Note . Read our big article on everything you need to know to invest in Spain: rental income statistics, rental laws and regulations, etc.

Read also:

Overview new development Costa del Sol