This post is also available in: Español (Spanish) English Français (French)

Forecast for the residential market in Spain for the second semester 2020: -10%

We have all been confined to our houses for a month and the important question is where we are going with real estate prices, the big question with a lot of uncertainty …

The important statistics to follow are the level of mortgages granted today we only have the statistic for January 2020, that is, we will only have the one for March, probably in June and the one for April in July, the fall should be very important because speaking with several banks most of the mortgages where there was a favorable record to give a mortgage are now stopped and will have to be looked at after confinement …

The other important figure is the evolution of prices on the portals and also the volume of apartments published because we have observed that many real estate agencies have greatly reduced the number of properties that publish up to 70% less to cut the costs of real estate portals.

The Idealista statistic currently available is stable for March and gives us + 0.3% for Spain at € 1,758 / m2, + 0.2% for Barcelona city at € 4,111 / m2, + 0.4% for Madrid city ​​at € 3,741 / m2. No publication date for April is the one that will be strong …

The Habitaclia portal provides us with a stable figure for March in Barcelona city at € 4,894 / m2.

The covid-19 or coronavirus crisis is very different from the financial crisis of 2008, it is much stronger: the realistic forecast for the fall in GDP is 12% by 2020, not 3% as some banks publish as of today we will probably have a recovery in U or in L that is to say that we will take. We see more an economic recovery in L that is to say very slow: a depression. To date, more than 22,000 people have died, and 213,000 infected in Spain.

The demand for housing will be affected by the impact on employment (ERTE, job loss), and by the current disappearance of the demand by foreign buyers who cannot enter the territory to visit probably until September. The type of homes that buyers will be looking for will probably be bigger because people discover teleworking and the need for space in their home, with more light and a garden or terrace, and probably more outside of big cities than before.

Forecast of real estate prices and volume of transactions for 2020: -10% to -15%

According to the famous economist Gonzalo Bernardos, he estimates a decrease of 20% in the volume of sales by 2020, we think of a steeper fall of up to 15% for prices, given that this situation will take longer until new transactions begin. For rental prices a decrease of at least 3%.

The latest sales and purchase statistics are from February 2020 in Madrid, they had fallen 23%, to 1,516 new construction homes against 1964 in February 2019. In Catalonia, 1,173 transactions + 2%.

Developers like us have requested a VAT rate reduction from 10% to 4% on the purchase of new homes with Apc Spain … In Catalonia, the demand for new construction is more important than the supply, which is why the prices of this type of housing should be sustained: 25,000 new homes a year were needed before the crisis when 13,855 homes were delivered in 2019.

At the level of house prices in Madrid and Barcelona, ​​he anticipates a drop of 10% due to a drop in demand and with more sellers who will have to sell for inheritances or save their businesses. He anticipates a 7% price hike by 2021. We at Eliore Properties are much more conservative because a major problem is going to occur with corporate debt. As of today, many SME businesses are contracting lines of financing for ICO loans with a state guarantee from the Ministry of Economic Affairs, for a total of 200 billion euros with one year of non-payment of interest at a rate of 1.5 % the leaders are Santander and Caixabank but what will happen in a year if these businesses will not be able to pay?

For any questions you can call us at +34 930 185 648 or send us an email to [email protected] until soon.