The honest answer depends on your reasons for buying a property in Spain. There’s a saying in the financial markets that equally applies to real estate when it comes to investing:
“If the reason for your investment still exists, so too should your investment.”
Meaning, it’s prudent to hold your investment position if the reasons for your investment are still valid. If you are investing in houses for sale in Spain to enjoy your holidays, for your retirement or primary residence, or to escape the long, dark winters in your home country - then, fortunately - Spanish weather is unaffected by real estate trends and your reasons for Spanish property investment. It will remain valid and well-timed.
If you are buying a property in Spain to maximize rental yields and/or you’re hoping to achieve capital gains on your property, then local real estate trends will influence the answer to the question:
Is Now a Good Time to Buy Spanish Property?
Timing is everything with most investments. All asset classes, including property, are cyclical in nature. Peaks and troughs are characteristics of all asset classes.
However, timing is only imperative if you need to buy and sell your property within a time frame to achieve your investment objectives.
The great news about Spanish property prices is that despite the economic slump from the global pandemic, house prices in Spain have been steadily rising, bucking the trend.
Is it Safe to Buy Property in Spain?
Yes, “as safe as houses” as they say. Here’s why: the latest housing pricing data from Spain’s National Statistics Institute (the Instituto Nacional de Estadistica (INE)) shows a steady rise in property prices. Nothing is sharp and steep, just slow, gradual growth. It is characteristic of a stable real estate market in Spain that’s been growing since late 2012.
Spanish house prices rose 1.68% during Q3 2020 (2.2% inflation-adjusted). In the previous year, property prices in Spain in 2019 posted a 4.68% rise according to the Instituto Nacional de Estadistica. On a quarterly basis, house prices increased 1.15% in Q3 2020 (1.67% inflation-adjusted).
Price increases by property type:
- Existing properties: prices rose by 0.76% during Q3 2020 (1.27% inflation-adjusted).
- Newly constructed properties: prices rose by 7.46% year on year in Q3 2020 (8.01% inflation-adjusted) - up from the annual rise of 6.64% in Q3 2019.
Spanish Property Prices Forecast
The following housing prices chart shows a steady uptrend in Spain’s property prices since recovering from the Spanish property crash.
The promising outlook for property prices: despite over five years of continued housing prices rising, Spain’s real housing price is still 23% (-32% inflation-adjusted) below peak levels witnessed before the global financial crisis.
Spain’s Housing Supply Reaches Equilibrium
It is no secret that during Spain’s property boom housing supply was in surplus. Skyrocketing property prices and foreign investment fueled a surge in construction projects and real estate agents.
According to the Institute of Business Practices (el Instituto de Práctica Empresarial), housing stock reached peak levels back in 2010 (at 931,615 homes). Since the peak, home sales have averaged approximately 430,000 per year (for the past 5 years) with 50,000 new houses constructed each year.
This adjustment has corrected the previous housing surplus, where the Spanish property market is now said to be at equilibrium (housing supply matches demand).
For the first time in 40 years, Spain’s current account balance has also reached equilibrium, a strong sign of economic stability in the region.
Considering Buying a Property in Spain?
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The above information has been prepared for informational purposes only. It does not constitute financial advice. Past property price indications are not suggestive of future Spanish property price forecasts.