Have you always dreamt of owning your own little Spanish bolthole by the sea? Perhaps you’ve decided that, with Brexit and the pandemic, that 2021 is the year to put your plans for Spanish home ownership on hold? Well, it could be time to think again. In fact, now could be the perfect window of opportunity to buy Spanish property at affordable prices, with price reductions currently in place. What we don’t know is how long the drop in Spanish property prices will last! Here’s everything you need to know:
The Biggest Drop in Property Prices in Europe
US credit rating agency Standard & Poor's has published a report forecasting property prices across all of Europe’s main countries throughout 2021 and beyond. One of the stand-out predictions from this report is that Spain will be one of the countries that sees the biggest drop in property prices as a result of the coronavirus crisis and its restrictions. However, once the prices have bottomed out they won’t stay down for long: according to the report, Spain will then go on to be one of the European markets where property will become more expensive.
Property prices in Spain are expected to drop by 1.4 percent this year. The only country that will see bigger drops is Ireland, where property prices are expected to decline by 1.6 percent during 2021. Only one other country is forecast to see property price drops during 2021; Portugal is expected to see a decline of 0.5 percent in property prices. According to the Standard and Poor’s report, all other markets within Europe will see property prices increase throughout 2021.
That isn’t the end of the story though: before 2021 is out, the fortunes of the Spanish property market are expected to have completely reversed, with prices having increased by 1.8 percent on the current rates by the time the year is out. What this means, in short, is that within the space of one year, house prices in Spain will experience one of the biggest price fluctuations (fall to rise) of any of Europe’s main economies, from a 1.4 percent fall to a 4.5 percent rise. It also means that, if you buy at the right time, 2021 could well be the perfect time to invest in that dream property in Spain that you’ve always talked about.
How Accurate is This Forecast?
Of course forecasts are just that: predictions. That doesn’t necessarily mean that the drop in the market will be quite so severe (or that the recovery will be as rapid as has been suggested). There are other sources that suggest 2021 will be a year of consistent price drops for Spain, rather than price rises. Spanish financial services company Bankinter, for example, has suggested that there will be a 9 percent drop in property prices between 2020 and 2021, whilst consulting firm Forcadell and the University of Barcelona have forecast even greater price drops than that. In a study that was released in October 2020, they predicted that throughout 2021, property prices in Spain would drop by 16 percent.
Which estimate will be closer to reality? The only way to answer that question it to wait and see. But what we do know is that drops in property prices are not necessarily a bad thing, particularly if you are a first-time buyer, or a new buyer in a foreign market. After all, there are very few situations where getting a lower purchase price can be seen as a negative thing! And buying at the point where the market is at its most depressed means that the value of the property you do purchase can only increase. Of course, a depressed property market is a worrying time for the economy, but it is thought that as the coronavirus crisis lessens, and individuals have more stability and confidence in what the future holds, the market will bounce back, as it always has before. If you had planned to invest in property in Spain during 2021 then there is no real economic reason not to continue with your plans: you could find that you get a much bigger bargain than you were expecting to find!
Are you thinking of investing in a property in Spain? Whether you’re looking for a permanent home or somewhere to spend long and lazy holidays, our local property experts can help. Get in touch with our team to find out more about how we can help turn your Spanish property dreams into a reality.